January 24, 2021

Kerala: Preparing the State’s Economy for the ‘New Normal’ Post Pandemic

K N Harilal

THE ways we live our lives are changing drastically because of the pandemic, environmental disasters, and the global economic crisis. Whether we like it or not, almost all spheres of life are witnessing the emergence of a new normal. A return to the old normal is ruled out. The Kerala budget for 2021-22 is a brave effort to take on the challenges of the post-pandemic order. Notably, the budget is well informed by a thorough understanding of the pattern of changes occurring in different spheres of life. The budget presents clearly laid out strategies to prepare the state’s economy and society to meet the challenges of changing times so that the past achievements of the Kerala model of development are preserved and the state’s momentum of progress is sustained.

One of the central features of the post-pandemic era is the digitisation of the economy. The divide between the real economy and the digital economy was substantial even before the pandemic. The technologies of the digital economy were already in use. But the pandemic accelerated the diffusion of technologies in no time. As a result, an overwhelming proportion of activities of everyday life are now shifted to virtual platforms. Teaching, learning, training, conferencing, medical consultation, trading, investing, entertainment, and a lot of other activities can now be done online. Among other things, this has profound implications for the nature of work. Labour process in full or in part is shifted to the online or virtual platforms. The culture of ‘work from home’ or ‘work from local work stations’ is spreading fast. As observers point out the patterns established during the pandemic are unlikely to be reversed. In fact, more work is likely to be moved to the online ‘work from home’ mode. The Kerala state budget has proposed to convert this challenge into an opportunity. The idea is to solve the problem of unemployment of the educated youth in the state using the new trends in the labour arrangements. The state is characterised by high rates of unemployment, especially of the educated youth. It also suffers from low work participation of women. The shift in the workplace from distant offline centres to the online/ virtual spaces can be tapped for employing the educated unemployed youth in the state.

An important precondition for the success of the proposed strategy is the presence of adequate facilities to work from home or the local stations. The budget announces a package of measures in this connection such as free and uninterrupted connectivity, the supply of computers, development of local work stations, and provision of required infrastructural facilities. It is also proposed to have appropriate training facilities for imparting the required skills to the educated youth who are the principal beneficiaries. The strategy also envisages the proper flow of information between the employers, on the one hand, the employment seekers on the other. The budget proposes efficient institutional arrangements to ensure such communication between different stakeholders. Interestingly, the idea is not to specialise in the low-end nodes of the online value chains such as data entry operations. It is important to move up the chain to get access to the more remunerative nodes. It can be achieved only by improving the knowledge endowment of the employment seekers, or the participating firms. Therefore, the budget envisages a strategy to transform the state into a knowledge economy. The making of a knowledge economy of course is a long-drawn-out process. The budget lays down the road map for it in terms of setting up 30 centres of excellence, enhanced funding of universities and creation of hundreds of new teaching positions and research fellowships.

An equally important but closely related programme announced in the budget is that of reintegration of returned migrants. The global recession and the pandemic have caused a sudden upsurge in the reverse flow of migrants. Nearly four lakh migrants have lost their jobs abroad. They should be rehabilitated. Unfortunately, the central government does not even acknowledge that the migrant workers who earned valuable foreign exchange for the country need to be rehabilitated. Incidentally, India ranks first among the top remittance’s countries in the world.

The LDF government in the state cannot take such an indifferent approach to the problem of workers. The state government is planning to launch a major reintegration programme involving the local governments and the line departments. The budget has earmarked Rs 100 crores for coordinating various agencies. The return migrants will be given special assistance to avail of various employment and entrepreneurship programmes run by the departments and the local governments. They will also be encouraged to join the new online/ virtual space employment programme announced in the new budget.

The budget also proposes to augment the successful Subhiksha Keralam programme launched during the initial months of the pandemic. It is a ‘grow more food programme’ launched in anticipation of food price inflation and a possible shortage of food due to the pandemic induced disruption of trade and supply chains.  It has turned out to be a big success on account of widespread participation of the local governments and the youth. The ‘grow more food programme’ would help enhance rural employment. Further, it can be combined with the rural employment guarantee programme. Incidentally, Kerala has an enviable track record in the implementation of the employment scheme. The budget has also enhanced the allocation for the state’s unique urban employment scheme named after Mahatma Ayyankali.

One important fall out of the pandemic world over has been the conspicuous worsening of inequalities. Its impact is feared to be worse than that of the Covid-19 virus. The emphasis on creating more employment opportunities, especially in rural areas would help address the problem inequality and deprivation. This should be seen in the larger background of the general emphasis on social justice and social welfare.  It has always been the defining feature of the LDF governments in Kerala since 1957. The new budget makes a concerted effort to broaden the social welfare-justice network in the state. It has, for instance, enhanced the welfare pensions to Rs 1,600 per month which now reach nearly 60 lakh people. The budget has announced significant hikes in the remuneration given to the ASHA workers, Anganwadi helpers and teachers, Kudumbashree functionaries, etc.

The state is known for its commitment to democratic decentralisation. This was reflected in the recently held elections to the local governments, not only in the high voter turnout but also in the pro- incumbent nature of the verdict. The mandate was an overwhelming recognition of the good work done at the local level. The state government has recently accepted the recommendations of the sixth state finance commission. Consequently, the budget has significantly enhanced the plan and the non-plan devolution to the local governments.

The budget also expresses the government’s resolve to continue and strengthen the Navakerala Missions in the areas of public health (Ardram), education (Pothuvidybhyasa Yagnam), housing for the poor (LIFE), and environment and waste management (Haritha Keralam). Interestingly, the UDF leadership had earlier declared that they would discontinue the mission programmes. But they had to withdraw such statements after the elections to the local governments.  In fact, the UDF had to withdraw their adverse statements on the large-scale infrastructure development programme in the state as well. The infrastructure projects launched with the help of Kerala Infrastructure Investment Fund Board (KIIFB) are making good progress. Moreover, public opinion is overwhelmingly in favour of the KIIFB and the development missions. The missions and the KIIFB funded programmes represent innovative ways of challenging the neoliberal dogmas. The market fundamentalists favour smaller governments and minimum public action. The LDF government is committed to moving in the opposite direction, wherein public action is resorted to wherever it is necessary. The latest budget is an attempt to extend the Left alternative to meet the challenges of the ‘new normal’ in the post-pandemic world.