balance of tfzak, fepixttpinceg llwd , net chpitfil flows : qn anqlvsis of economic development in...

7/29/2019 BALANCE OF TFZAK, FEPIXTTPINCEG llWD , NET ChPITfiL FLOWS : QN ANQLVSIS OF ECONOMIC DEVELOPMENT IN K

1/39

Working Paper No. 258

. BALANCE OF TFZAK , FEPIXTTPINCEG l lWD ,NET ChPITfiL FLOWS : QN ANQLVSIS OF ECONOMICDEVELOPMENT I N KERRLA SINCE INDEPENDENCE

T.M. Thomas IsaacRammanohar ReddyNata D u a u r y

CENfRE FOR DEVELOPMENT STUDIESULLOOR, TRIVONDRUN - 69S 011October 1992


2/39

RC)LMCE OF TRClDE. R E M I T T M E S MJD NET CC)PtTCW, FLOWSCUY M A L Y S I S O F ECONOMIC DEVELOPMENT IN KEF;tAiA SINCE INDEPENDENCE

4 abajur- draw back of th e plsthoca of re g io n a l s t u d i e s i nIndia is t h a t most of t h a t n ter,d t o treat regional development asan autonomous process of regional product i ve forces and relationsof praduct an. 'I'he mu1tj. ar iaus i n t e r r ~ i o o a l elationea tha timpinge on regi~nal duvelupnrent are not. gi.ven s u f f i c i a n tcansiderat ion. U t best such a cmncorn i s canCirjed to c e n t r e -s t b t e bu.,.dgetac-.*flows; which a r e orrly o n e component of the overallfe y i anal bal anze u* payments accaunt.

? h e reasons f a r t h e abave lacunae a rc both em p i r i ca l as wellas tnaoratical. hbsence a+ re l egant data is a serious stumblingblock.. P-to r-ecf~onaiaccounts o f t ra d e , +actor payments or capital+:owe are maintained. Flt t h e level o+ theory many of th e toolsof analysis, p a r - t i c u t a r l those re lated t o i n t e r r e g i o n a l t rade;have been re f rned i n t h e context a+ i n t e r n a t i o n a l re lat ions .t h e i r t r anspor t a t ion t o th e realm oS r-egiatbal analysis is besetwitn ncrmer~)uf)problems. Ttta present paper I s an attempt toin te g ra te external relations i n t o the analysis of regionaldevelopment of Kerala .

Kerala has a h i g h l y corr~rnorc.inlisedeconomy th a t specialises1n expor t ar lented cultivation of commercial crops and pracassinqof th e r r products. St exports araund SS per cent o f t.he outputof its primary and secondary sectors to the r e s t of I n d i a andfat-eiqn countritas. 4 1 ever, greater proport ion of the regionalconsumption is m e t through imparts . CThomas Isaac and Heddy,19921 In terms af per c a p i t a s t a t e domestic product or itsg r o w t h over time, Kerala 5 % one of t h e backward sta tas i n thecountry. ?Ioder-n industrial activity is yet t o make anyoignificant Impact on the regional production s t ruc tu re . The


3/39

aqro-processa g i l d ~ t s t r icj, which oominale t h e secondary rcctmrpt'odu.ccion as we>.1 as empl oyrnent , are character i s e d b y labwt;.r!tenarvs, and l o w pr0du.ct .ivi y t e c h n i ques. Historically therei nd i l s t r i i r s p l ~ y e d lte r o l e o f . r e s i o u a l sectur a c c ~ m o d a t i n g thesur-plus 1 i\lor!?" C7'ht;nas Isaac, 13923. A s a t-esul t , er c a p i t aodtput of t h k a r eg ion has besn re la t i v&? .? . l ylow even thauyh aareater p r o p o r t ~ o ncC +:lie regronal workfarce is rmp1ty.d i n therrcsn aui"icu2 ul-a1 E ~ C ~ Q F . i;antra f o r Development Studies, 1'3773Despite ti \e 1 - e l a t i v e ly backward product1or\ base, t h e r . g i ona13evaloprnent 1.135 ;leer1 c i i e t i n q u i s h e d by significant raciali vas acni. tn educht i orb. h e c ~ l h arcd o th e r sac; r l in+ astructut-usLTht -akar , , 1?Y2;. Crnsequsnt1y , t h e work.+arce i n lierala isb e t t o r educatecr. The aclu.cati nal attainment uf th e wwlcforcm,tna l a w la:>c'?ur b s o r ~ p t i a nc ~ p a c i t y of aycicu). u r e dominated b yp e r u n t ~ i? ~:!-oPsarid th e h ig1: i nci dencs o+ wage labour r e l a t i o n chavs :!-em1 ed i n trdarb vi sib l C- undei'emplaymen z n the region. l'heabove compoundsd Lip th e slow grohcit CC jvb opportunities in ttlemoderrs sector hss caused an cjpen ~tnsmplsycnantr a t s near ly thrset~ i e s t h a t u+ the national average CMctkherjge and Thomas Isaac,17'!f I . Micjration to r e s t of I n d i a and to foreign countries car.ba consider-eb as an i [::pot-tant ad ustn~ent mmechanism t o theworsening einployntent situation zn the state.

I n s b ~ o r t , t r a d e arid migration at.-e t w o v i t s i e x t ~ r n a lr e l a t i 0 9 6 rtrat have to be e x p l i c i t l y consider-ird I n any atte:ltpt t oex p l a rr l th e r e q i ~ n a l development oS Kerala state. WE ha'uradiscussed eLsewhere i n d e t a i l the t rend and pat tern 0 9 extct-{.:a1t r a d s Clows af Kerala CThomies Isaac and Racldy , 19923. A severeand growing imbalance in the e x t e r n a l t r a d e was seen as m e c ~ fth e nrost impcrrtant Ceatc~.resof K e r a t a ' s external trade i n therecent periad. The r e l e v a n t data i s summavised i n Table 1.

Rs. $224 croras and Rs. 2613 croras warth cornmoditicr wereexported frcn Kerala during the years 1975-76 and 1980-81. The


4/39

total imports in those years amount& to Rs. 1448 c r o r w andRs,3441 croresa The exports exzeed t imparts i n theinternational trade while the imports exreed the ewpartb I n theinterregional trade. Overall, the imparts are higher than t n eexports .

7hu.s i n both years, Eerala had a sizeable trade deficit. 6sth e imports tended te grad fastsv than the exports , w e S i n d th a tthe trade de4icii: u f t h e reg ion r ~ s er o i n ~s:223 crares l a Rs.822crores cfurirtg the period under tli ecusaion. Yhs damst i c producto f t h e reg ion at factor cost was Rs.2228.24 cruras i n 1973-76 andRs. .YSGl5.36 crar-es in 1988-81. The trade d M i c i t s have sharplyincreased re 1atively to the 1ncreass *of dam-tic product% nw i t h i n t h e state. The r a t i o was 16 per cent i n 1475-76 and 23per cant: l n 29811)-81,

It wag noted t ha t it would be unrealistic to assume that t h esuhskantiaL volume af crude petr-aleurn nousd i n t o and redined a i t cmoved out as . regianal imports and exports. The Cochrnrefineries, a central public sector undertaking, could b e troetadas- n enclsve unit and the imports of crude petroleum and a x p o c - t sof 'processed mineral u i f 3 be 1.gnclrsd. Instpad, t h e actualconsumption of the mineral ai1s i t r Kerala crxrl'd be considered tobe its net imparts. Qccordingly the trade d e f i c i t , accardiny toour secand set of estimates, i n 1975-76 was Rs.364 croras and 862crare6 in 1988-81. The rat io of t r a d e daSfcit to a ta ta d~mesticp r d u c t rises f r o m 16 per.cent i n 1975-76 to 24 percent i n 1988-81.


5/39

Table. 1Est imates n+ Reglor?c?t E;


6/39

Significanca a+ Balance of Trade to Regional Analysis

to t!14+ Scst u+ our itriow3.adye the on1y serious attsmpt t og r a g p l e w i t 9 t h e ecortamir, significance o f in ter . - regional tradebaianc* in t h e : t~drunc:crnz:sxt itas besn by B.N. Ganguli T19tS23.Based on 5,3; asi;u~t;-a.nrniat1s C 1'362~ estimates, Pr of . Gang~r l dr&watteni. i or1 Lo t r ~ e f qni t i cart tr ade I mbal ar:ce that ex i s t between\ r a r i o ~ ! S eg i ons i r ~ t~dra attempted to analyse it as a case o t' i n t e r n a t i o n a l t r a d e i n v o l v i n g a common currency ' . he r ~ o t e d h a tI n I i ~ d i ~h e i r ? . i ; t i t u t l u n a l arrarlgsrnents had no t yet developed topermit 'abserltwe c a p i t i l l ists p a r t i c x pa t ing active1 y i n lacr iinvest,h~ersec' or fu r e 4 f i c i s n t 'equj l i b r i a t i n g s t ~ o r t erm cap i ta lctroventer~ts. The bdnki nq ne t work wns a1so regional 1y +raymented." I n Ind ia t h e paymeilt p o s i t i o n of at l ea s t c e r ta in states orI-eqiuns i s mare 1. i kt? that. of seperata nat ions and less 1ika t h a toi un i t s i n a f u l l y ~ n t e g r a t e d conamy.. . Paytnents +cam r e y i e nX k.2 nort )r; r educe X t-osece-vesand deposits and increase those o4noir X . But banks i n X cannot f o r e s t a l l a n y pressure towardsntu!. i p l e ccl .r~tract ion by havinq enough government s e c ~ r r iies t ok&11 CF +dl: ing back on othst- sectmdary reserves. Thur t h e f a l lot S a t ~ k .c;cservro; .dnd deposits i t ? X as tha result o+ pt.blonqed~ ' . ; : iin pr-.teas o!: e x ~ o r t s + X i s mure l i k e l y t o aet i'n motion ;an l u l t i p l e c o n t ra c i ro n because the assets oC X banks are noti . e d a i l y saleable outs~do , and may even cause bank +ai1urerhEGanyuli i902: 1P41, Factors s ~ t c hus rapid integration o+ Indianecorto~;ty and dove1upfliafrt: o+ i r l t e g r at d ban s.ln iratwor k have proveds(.tct-I e a r s 0.C. r ey orial i mbal ac-tces unfou.nded. Further, suchf i ! ~ a n c i a i dlsequi l i r ia w e a l so unlikely because th e tradedeficit rugions were 1 i k e l y to be th e econon~ica l l advancedregions wh?:?u i t was khe backward r.agiot.rs t h a t had t radesurpl uses. P r o t . Ga~3qu l ihimselq h i n t s o f the above peculiarr e l a t i o n s h i p in nisi discussion af th e causes o f r e g i o n a l t radei mbal ancas.


7/39

mkLat.!~.:.~.C -l%!!.@!m?-8-..QE%t ~ . . ~ ~ f 3 x c n J%.CfntrateraX trersscet-e 64 capital ;and incane uao as

th e ma.,-- cause 401" r I t rade imbaFnncesi. Unil*terctl.it-di.v~;ifPS 61%~ take $.ha + w i n oF


8/39

alder est :~taie3. L'rhona.; . aac: A , - I ~DUVVUTY, 19923 . Desipi tc thessIicnitatians Tsb3.n 2 (nay be t+il..en as a broad inr?icztc.r o f inter-state 'It-aciw ba: a?res prevs.1 rrd. 'today.

I t rhowr t h a t nmmicg +he m u j o r atakea 13ur#jeb, Katnataka,+iaryana, Ancl!r~-cr Pt-;*tier-;h Maharar; :~tra, bi- sr Pr-tadeeji? and t;:er-3.1 ahad s j ,-nj.+ cant t r - a d e


9/39

-----I--------------------- ----..--.. .I---..---.....-CI-".LILII-.C.-o-"o-....-b--.--$ 1 ; (2, ;3 j (4 1 ( 5 ) (61

0-- - r r ~ r - - r - - r r r r r - - - e . - c c c c c c c - c c c - o ~ o r r r r r r r - - r r - . r r r - - - u - ~ c - ~ - ~ - ~ ~ ~ ~ i i ~ ~ ~

i I . S p e c i i i Category States1. Clsrre fee 28 0 to ! lea - 1 5.77 . (- 1 512, daaeu & Rashnrir I F 1 113 - 81 - 12.67 (-1 1413. n rn i g u r 44 10 - 34 i -1 39.87 ( - ) 2464. Hia~cfialP r a d ~ s b 22 l b ( - b ( -1 1.19 (-).IS5. Tripurr 3 $ . S t - ) 5 - 1 2.35 (-1 26S , Regtiaiaya I 3 * td8q. 167. N a g a l i n d I $ 13 7 Neg. 96111. Union ferritarlea1. Dellti 1353 923 ( -1 531 16.24 (-1 11292 . ~ i 7 t ! f o ~ 8 2 3 - 1 :a ( - ) Mag. 1-1 4523. A r u n a c h i i P radesh 2 0.1 (-1 i ( - ) Nag. - 1 194. P a n d l c b e t r y 12 I2 U f9eg. 63. Gor 60 135 85 39.40 833-----.----I-"..-----------.--..----- - --..---me.. L--"- - . . .~o. .o~--~I I - -~-L-- . . - - - - - - -

Tot a1 22609 22609 8 0 8------------.-----a "--"---4---------....I-u-"-----.---~----c~----------------o--Source: EH. Nehta, 19831.

I t i e seen t h a t nrost of t h e special catagory states despiteLi,eir- relarive ecur\arn&cback#ardne%shave t rade def icite. Kefalr;:lbo is a s i f111larcase. Its pee capi La state domsstic product i sictre* than t h e natiailal ;rvt?r-a.~e. 8ut it hias an adverae tradeS n l a ~ ? c a . ln t r t i s instance a m a r t i f i e d version of the second typo\ ~ r dzscqui?.orA ating unilateral t ransfers tha t Prof. Gangulir a.i-eu ed t 3 ber~omsrsrelevsrnt.

in t h e second model 04 adverse regional t r sda balance ttHr s l a t i v e act-elaratiort of impor t s is ~ n i t i a t e d y large wale f lma+ i nves tmnt +undr by the central gwvar'ncmrct or privatecapite2tsts i n t o a backward reg ion - say X . Tho funds are wonton local rcersourcos and on ineporto. 'r e tho extent t h m funds areexpended on local resources, t hey llrould ra i s e income and t o aI imitm r i s e i n the p r i c e o+ such c ~ t t m c i iies. Bank Gesacvemaiha c l r i L 1 increase to the saxtent oi: Increase i n demand deposits.


10/39

"S ince banks i r t X m c ~ y i1ot be aLiie of wi 1 1 n g 4 o expand l u c s lloanti, th sy will acqr*tc-~!hor t teritc a s s e t s Lh!,oucjh t t is l r ~ d i a r tmoney rnnt-k.e.n.. c\$ i lnaorta r z s s . t h e Bzi;lks i X i 1i A i t h e i rnswly acquired - - I s a n t e l t t t h e clrair~ o narr X...... X an0 non-X ar.e so 11;-:1:.sdkith a common monetai'.v rjyste111tha: t h e appos.itzz or-i.cs mr)vet~~entsccaritemp1att:d :ill ~ X a s b i ~ d ltheory do rtut occur , e x c e p t I!? A srnz,ll way as prices oi nont t .aded good


11/39

1977-1. 'Chis intc-arsqirjnal c n l g r i l . ~ ~ ~ ! . :.12 t t \e h i i ly t r a c t ? .accel arated i n the + i l L r os c;.cid s i < ? ~ iH. Et~tert-eyionalmiqra'iiar~';o he ut-ban cetxr-ec, 0 4 Irtdia rlari b~ cot-w.iCSe~6d b th e EBCO~'~~';stream 0f i f i iqcst . ton. I n i t i a . i l y ti!i:+ st?-earn s a 6 dominated b y . :.fie?~J c i c a t e d nen~bsl- ~ r f h e upper rii-tete qctc.~try Cam2 1 i e c i n sear *:i! 0 ;c : ! ~ r i f - a l abs. Tc became the !;,c.ct i .n;pov.ta~~tutlet .For th;5(11-uwi S wor-b..Corce r l u ~ , i n q -C!.\t-, .:'i 6ksas arid s i x t i es. The t i l i 1-rjs t r e a~~ i:3 s .i.ntsv.t7s;:imiaJ. a!igr:tt:icin t i 3 C ~ y l c . 9 , Halsysia and 2irrn~frtayacnrn~+) m o s . t l y try nw.wrter...; 3.i , I + castes ant; ecrrnrnurll.kie~aX any i s ilr,asj;tn). RL??.it ~ i \ i . i pi3cket :+ .$ ii sfruth centr'ai c;:a?.slt"b ; f 0). e 'The ;oh upp?sr~tuniie5 GO: ,Lhesi:, iiec.1 arra i f : ues:: .>+ ?.r:C?.?. i~ I 'ia~13140 t~egunto dwindle di ,~- j . i~ i it i t s sever t ; i u , Tiice ;,:.\:ei.acje pet: gra- i r i 0i.i to r e s t o$ i fidi elt:ar;.i. ned .!'.rumer-,nur?r! .;:?BWZ 3. t: i:te ; &&?!c- ta 30Q0 per anr~umb y t.til:er?G c4 t t t r s SC7 ' l ' i f ; > CGOVUI~I.I:.~~?:-~~;)+ $~:!lde:icllrting ~ x i c b n s l ~ r j tp~rj t -runiriea hat. k h ~atest phase l r l t l : c .~ n irar ian h i s t o r y (3+ K:::erala, v5.s. the Sul mlqraticrn, aperlei! trp.

T n e c a n e t a t r a t i o n oS Gu.14: migran t s .j n *;erala maybe 1ini::ed kc )i t s prlrJr e i : p ~ r . i e n c e n i n f ~ r i i i t i o nand t h e close ties the co;ls!:~lo e c k d s i3f th e regicrri have a l w a y 5 ttaci w i t h th e &rab countries..


12/39

her-e, i n ~ i d e n t a l L ; ~ , s a u e r n a r k a n l e co i r r c i dmce not o n l y i n tltertqlwral .:ant,ettt;~-ai'U i l bue a;. o in the pakcern of Gulf niigrati at?t+ that of t i ~ r ear L : b y - C L - ) ~ort-!.lal k ~ ~ in migrat iat-I. Tha we:rdyem u k l . net mryrst iot ' t i : c ~ tnw Dui+ ~ toun t r i e o ,at t h e end ofseventies r8s.s 2s t i11w. tebt~ be i i Y ( ~ ~ r ' \ d@,130(6. Tha stock. o iniy in ts +rum t:::;erala i i , ~ u 2 . i . I ) L ? C ? ~ , - ~ E S r d ~ l d l ~r t ~ . r ~ ) . a s ~ ~ ~oMwnd I ~ a l + rnil1iur.t ti:,, the nl iodia of t h e ~ l u t ' r t j ~ s .

Tr!3MA~i*efl: b!-.*!!a. a. .In T & i u 3 , we presen+, a . t i m e 5.er . i .o~ c r i t ! r e eut imateJ

rmi'ttance I c t r l ow irrri.o L.erc?l . t4e have ~cpdaisad h o e s t m&%s of.rcrclrittance i i ~ fa t s *.;\to nd ia .f r - o t n 6~11 3!'13 nail G u l + c ~ u n t r l e s b yk y y w L198Y .1 . i=clj!.uwlr?y Sulati anci r'?odk CX98!Si, ha 3~6ufittrd t h a t;iO p~ cent t f t l i ~ -etnittences +rau rn U ~ 1 . i cour~tris and 5 per cec-ctof Lhat .)r.om no;t GuXi ccsuni.r: t . 1 ~are *rlest n& to Ke t ' a j . ~ ~ . . 1 1 ~resu l t ant &!s1.;~rna.refur r e n t i ICani:s? i nt 2 cws ttrto ! f . e v d i a i r t ptrlCapita terms is pt-c,rsar;t~c) ll Table ;3. Tho! t ' e i l ~ i < : t ~ ~ ( ~ ~ ?n6 iuw i r t t . : !the 'State suvyab upwards i ron: 19;:;--76. It t-end'; to y 1&teal!of. :4roi Che oat.7 y eiyhties. 9 s 9 r'atra a+ the dotrescic prrjdu.rt 94,the tegiori (SDI'; , %ha ra;r,f t tance i if 1c w was nay1 qi b 1u 4.1-t 1970-,11. In 1973-76 the t - a t io v~os3.0 per- ~;u I )L aild rase to a pe3tt atlQ.7 pet- rent in 1980-61, UUP e~jti(~8bkef re rn i t ta n c c .~ o rs n(54inc'zude the unofficial + i a . F i a w s tmrcrt? carrlb fot'in 35 to SC3 oev' cert;;& tha o+.r'icial i n t lows depertdiny uport f ac:tors such a?, srxci.tal-r5e.praeium, etc.


13/39

tt:::-~~::---~::---e::~r=~::a:=:=:rr:=:=.t=::~=tr=~:t~:=c~:r+;=r~=~r::-~~~::=:~-tt~-~~~Ystr Pw Eir~rta SF ?w Ca~ita i a n e~ , ii9tio ' ~ f FEF irpi t a Deposit Per Capita ar t io 04

S t$ in Rati3 Caew. Flitra ion% t a k n 6 Rit i~ Rzsittances R~ri t turngeta!i Ceraia farair k e ~ d i i SPI O q s $s &.era\r t o S f f

t o inaia ta i n kera!a to IndiaZ Z S = O L Z L X + = - ~ = Z X = - % : ~ = = Z = = S Z - ~ ~ S = Z S L = : ' ~ ~ ~ - & ~ = ~ Z - I = = Z A ~ = Z ~ Z = ~ F - L = C ~ =z~: :z=:=f~~t~~c. t t t=~erO~~: : : :

1 i 3 i 5 5 ; a ? 16L \4 t S 2-94252 9, ciaAi2 8.5;11: 0.5;3 i1 1.31i j 4 $, ?.j

iG0i 8.7:1333 2.871 1 2 ~ u.u91271 2.954-. .i d 5 L E Yz 4 j 2 P-.C3lb2b 4.dbIda !!ah2164 i3.Nl i 4 4 Z.422 3 ; ' ~ d.tl3sa323i i b

- - - -~ ~-~ - - . . - - - - . . ~ ~ -----.--.--.------Socrre: Ca1 i , liSS r i?i lorts 3s cr,~suwr ,&peadituue, relr-rant ic;ues.Col ;. Ineic Osta Base, H.L.CRnsdh.;i aarf r?e F ~ i i c yGrmg :;5?3).Coi 5. aasic Statistics Cielatinc t~ h o t s A? l . i d r a .Fiote: 1.f igures ue st curren? j r i ce4 .:.Per ; a ? ~ t a SSP for A ~ r d l a s iZa8 ard iQ59 iiro takwt irW ECG~MICR ~ V L O Y - I ' I ~ ~ .

3,Stnor = Consrlrew E~genditute; S@ -= State iiorestir F?roilu&


14/39

4 yeireral equ?1 br ic , o aclal vrii s cf t lw iciipsct a . C u:i 9r.3xi or1>a6 sd f rim riot .ye.c cjs~f,!i'triertab;er!2r1 t h e kbsei-tco of t h o rcqf.t?.redirrput /'output f~ a n t e w ~ r - knd ra i ?v.wr? t 2ai:i.f iCI opts Cor +:he I - e q zr:cc;r leconoilly. Yuwevor , :nicro lavs:L studies !>n migr'at.1on br'ain k.ev*alaprovide 1 t\p;.c;~-tat?C i rcsiatr.t.5 r ritc t i r e pass) b le macro eto!l:~nr;. c:consequences of i - em i , t t a n c r . r t w + nr rog i onal dove1op!itsn'iLCrmmet - ce Wesear h Sur eau, 1970: Mathew E8 . and hair, e . 3 8 G .19'783 Fzt-dka8h R.A. , . ! . f7&; Fi'adhdrkri~hilar!C and Fbrani m , :9$:1.7i acitJkilvinlclran G.n. i9273, A+tut- all, t t te daciorons reqart i i r~r j h.uu t i l i s a t z c c ~ .t: t i 1 6 9 d ~ m a ~ t i cot-iey resource counterpart 0 6 +QI-(3. ~ I Iremr t tonces are i nd i v i d ~ i a l 1 taker) try th e m i g ra n t 4af11i i esthemcelve~ . But . t l~e t -d t-e CWO caveate that t ~ a v e to be b 0 t . W i i ltrind.

Fit-at1 \#, t r k c h a w u l eve1 S ntpaci oo dti..mlc r p r n e r ~ .wll ': ~ I . JZ^ bemerely a sirwrnat.i~?;~.? t i le r r ~ - ~ . , t ,.uurtd i r n u x t : o+ Sr~t+tiUa.iig 13t.saw tig cleci s I O:IS r e . ; b L!-&ei txi%r.~zrr: huuset\oLds. Equal i \=import&;-1-t 3t .u ~ c l i : . ~ ~ s 4 j i ,2 r 3 ~ 1 r t b SGI I . r e i d i cumremi ttartce i.neorns. ?'ke burtotits n-f r e m i tCarice i n 9 l ~w rl r o ctatG 1 d ti; I r i * gi vef i L h s strCr~i9r!?t: tr.1bitT.2 v r - me- . c i l a r , i sms i.1 o y e r a t i ~ r l .s s t s e c i a l l y t h e t rc .d ik lo t ; s5 .) ;oL l ec? .~ .a i;rar'.~a:;1. >LJ ! t t I dnd ciear I , univer '~e. j .o r . ~ c t l c e?f g ; 4 L s ii\.-i;;. ':l\u rt:i~i"dn:-?as t c ) y i v s I ? ~ s / l l e r q i t l i andk i r ? . 1L L 5 scl kc?.! y t.i~&.L ~ , ig:.ij,t:i crI has A. eci ~ L I a b ~ r s s n i n g ~ f t ~ sillcorns d i s + , r i S r r L i . ~ s t ~it chc? s ta te . f i r e L.arar~t '? a t i c ) US C P ~ S C W I ~ ~expsnciltur.e WS v.i:-tun1.i:; t h s same 5.17 bo'kh 1973--74 and 1986.-87 [email protected]'5 ~ n db.21Cb7 rcsyect;voly. The + a c t khaC a nra-iocity c.C theGcrlC m l yl-arrta heltlngucj ta t h e re l a L i v e i y 'L owar income groups ,eav+?i!I + not t h s IbwesLi, also c ~ n t r - i b u t s d o th e above outcome.

Seccrndly, e;#en t h e mlcra clatia ti?& have been generated h i t t it - ~ ~ r l j r y ~C to h3usehr31 J l eva i i ,xomu ?. expendi t u r r and sav i ng have t c jbe taken w i ta caution. 'The inc0~71e as ti mate^ art? urri versa1 ! y~ t n d e r e s t i ated pa r t 1y clue t o d e l r bera t e underreport i ny by ttlc


15/39

t - ~ s p ~ r , d W l t u pe 31..\k:. k t j t!-ie I I i;.ncwJecjq& 01- t h e 5avinQf.i3 i r e c L i y dugl2sl.frst.i ear' p ~ r . ; > ~ r ~ , = ? i l y i ; ,y the fni~i-a;.?.w t ~81 t . Corrseqt\ar;t: ' i . ! / I i . t .e;ic!en~y ta overstate t!'~i.i t ro ;J~c i s i t r y t a !:O11Si.:.71d aut: ~f i - eniitltanr:e inciimca.Furt t~e t - , {. t t e. . r e t r tu C?i.vu.I.j'-'. i n +ormat ion regardinsfinancial. s+.vj.rfgs 5 @x i . ~ ~ t q e r " aC e h e prcpdrtia;1 o isa;, k c j l ; dutated ta t h e SF ;jir,ifia?:.w-i 0.6 r11 p r . ~ d ~ t c kv e assets.

An 9i;i den#:@ (:).I-' S l i C t i ;a pus s i a i l .l y i.lndep-~tat.inCJ rzJ~ \ c t i v . . -u L i ) . i s a t ~ o n u f esset.5 is i r ?d ic$ . t e r i i n a lar'gc survey ut- Gultcstcrt-net?~ u ~ h i c h e v e a l s ki ta t h e I j it 0.6 17iiqrant: rb?:tur.naecerrjoyed irnpl-avamsnt ir\ t l - > u i ~ 'U F - P S T ~ ~ . i 7 i x t l i t e aver t h & prior t ci i l iy r a tir1 t Nai - '3 R G, 07Si151l,l. !-!:ii.);:jye -hi.-r.eni j,n~zaifii;f l~ w s s i ! ; . ! : :cwnsi eten.;; w i t h t : h s , ; ) . t )-!r.kp,:..~dg~t.ve ti 1i sat;iijri CPTr - s m i r ar-ices ddring the pe r , islrf a + r i ~ i3teal:i.%

i-o~-$.~-


16/39

aterago tat- 14i;3-1.34 i t e J i?5!,--.:,;' LC, 1C;'&-U+, ySa,"a .I 6 t:t;c. G~a.1tSoom ptra5r-j .Frtt- I ! n t G :!a\*..:iab7.+. I he I . snk c>,.tiei L!;:.'.oral afr~cin i ) t i 7 2 n . ~oi. 619:-e5 A d i i i a );.t:'~.- &pi idexpur,ditc~.r~~i r i i t 'aved +rom :Q iii 1V7'B..i'l ti, 4 i;) lY'Ja-3. L;:ven moi - i ii ( t t ~ r ' e ~ ~ i i b * e i y ,k s j car, LO seei: + * - Q ~ :rdbre! :;', t r , d r a t i g o+ cwlsum@l*e sp end i t ~ . ~ r -&.0 d l l iT kd.3 1;ew:~d LO ~ A G Q l n t h e eighties Gxeceeding::u?ity in 1986-67.

PI ig~arro i rvof ! ic t l c a u b ~ 4 em&rk.;.htlk il.~crciac-e n per. c ~ ~ p 1 . 2 . : ~ccl;t-si!mgt iorr s::pen


17/39

iclg!,*r-,t :J1 , kicjits zn ccrtn:.ier.c.iaA banks r j lven .L;I Table 4s. 'Th* ;rapi A barit: ciegvsi t ; j :, F:


18/39

Section 3

mx_ec,c,t_~i~n_o,f-NeLCa_~it.allous and Phases af GrowthI:et4.aXa has rint beer\ c'kianrwl i. s i .ng t h e above crtiut?ds,nca GI-

S.3b iti99 3 t l k 0 i ~ ) ~ ' a d i t ~ k i+ : :3i.r>3-kfitr?rlt 6 2 : :Vr i i? s t a t e . i i : I % seer)that; t h s ewteflsisn t3.i: crecrt 'i to .r- ir .i f i ; end 1.tznus;.;ehaTbcz >.n the ,.


19/39

where r R stitn.jz f 01' t ?:c *,r . ; I , c c t 8 - , ~ e s , -but i - e ~ tot lnclrn, FR +STr e m i ttarti;o.; ~ ~ . G I E; r r r : l g , - r


20/39

. -- : t j r , .I. y e , e ,! -- G'I.. c a~ (2:T'lle 1 I i i ~ I I P n ~ j ~ - c , ~ v + ; ~ ( - I ~ I . J ~ppP::trS t.,

si qni i. i c ~ 1 7 t . ~di L . ; ? r ' . z ~ r ? t + r~jn, - 51 . ) on?? r-ctspect. If ; isutrii !


21/39

.ir;r f i lu~ t . f t h e c~l . : ' , f i i -r l ; i s r i g . : dw I?: ifialy I::@ 11crrsd .::hat ;n Chi*. Cw? ' s . ~qo t r - ~ . < . d ; ? sectur. k:ev ~ t l a :i a a d .?ways en ovoJ h sii j i ir +ican;.eq:or k scr pl u!; e V t ~ i i !-I ;.I>=> p9s.i:. s nciu+!~~:Gcr.tce p i j . 7RE. t r a : kda+frc'tt has bt2ur; i r ~ i ;; i E S ~ Q ~ ; L c : , t h 3 i . n t e i - reaional kt-ade, Ga r et i i I t.l-,cr- w e i grct c . r i r i ' c e f feqjORWIr'ade in t h er . ru:tae wa" s;gr t~ . i . ic .? .~ . ,x Iy 1 ~ w e r i n t h * sarliev yearsf i t 2tfiL' h + ; ~ d ' ~ i':'.;?2 Aria I * t ~ + G v ; , ~ ~ ' ; ~ c J ~ ~ . v I s

hava p i t h e p: .r , . . s ir# i i t?, !. e!xpurt: sur.p.lus c~rt the intnt'f irqi wia l trade a f c!>irc~J:6 s& r i ; the *?fit P i --yc-a,"%, It!r-uuc;haut t1.t;x i : ~ i t - lJ L T I & ~ LICJ Z-a.1 ^ctLa.f l.~: t : . x ~ + ~ . A + c 1 t h e t e~-minat i~ l c

F a i l t r a f t ic a 2 . r I:e,ra!;. L' Thciina ' c itat1 v8 esttm&:ea a& itrs f ~ ( r t t l ~ utf l o *C~.C(II r e . c e v . @ ~CQCC I + : ! p i e fo l l ~ b i ~ n gvidencevsc.c~gcstsucre %ti ciu.ti Z OW . Fir . 't .1y, th e . r l r f - , z a i decade and half *i nclepi:ncterrce a per i sd rs F r a p ? i wt. l;hjrs+uai. of Europc:an (:&pi t.;i.t r '0tt1 t h e V J bin'kirtl[?,t,s.~!.,LI .-;rig5 t r a u l s oc?rturs oC P;erai~whit!:the.,. had irair~l.&Led ..;l.;r r q i;he ;,;i.~:i , t ~ ia i p ~ r . !d :,nrf Cram industrf diS . * C T ~ ~ ~ ' Yike csi i ' . weaving. F;sc:,c-arlilv , clrae i i ~ ~ ~ t f l e ~ i tlows 4t-mtL,I~'.L WI t t -a i CJCt'., 'C?o);'~~iiidrt~ wd * i : c r ~ t - i ~ I~ Q W C ? ~ - a y ti ) - e q l a ~ut.1 )tjL t t r S p + r i ~ r j i \ ompar :.r.c-;it .,:; iat;r.t- yec4i-S as wci.11 aq the shrc-f?rt. fas.ved bv Ott tz - r ~ ' 9 c j ~ 0 f 1 8 ~t 1% ~ u e ~ x p . 1 . ~i s ~ JY t h e relativelyI O~~PFI ~ ; F I ~ ! c > c ~ ~ . . # c ? R sor th e C Y ; _ ) ~ U ~ ,~ t . 8 - 1 9 ~ +jr i j t tw f z v *y t p iar t s a,':d i iz-.-ti lal . ,I.!rsennc oC any fi;r,jar arrect centrali t - t ' - t e s t f i ~ en t O ~ t " i i ! g L i l ~ y ~ * r ftl. 1he c!~*..volc.k.foft b the Fi17a:tc:~Cc? i i i f t \ . i ' ~ s ; l . r ~ ~ t~L*scjp a i d ;i j : ; l ? l ~ a t : : . e ! ~ ~ . i ~ r j r ;. . ~ . ; Q Y ~ A & ~ r o b l c m s 7tile Q f \ . Th6: ? 0u.s u.4. i21 sts.L t r. i,.tsi.r,rnl!- r uvcn(,lc.s. Lo t h e pr in is la.t.a,Lar; i;'i Travaticcrr-e aoci ';oc:rl,r! we5 &!.a9 not aciequatelyCGRP@;t'.iit@& ' f 'hzrdly, it ! .~t)&lld ppeirr t i . ~ a L p r i v a t e India11irlve:~tmer?t li>+.lo+v St-OT! try&! s t i+ l n i l i a


22/39

'!'he . i . 4 . 9 . r : ~ r'+'; at:b p; y , i n \ , - , ~ ~ ~ : n e p ? : ,6r f c ~ . c i L L,.&?I y t t l ~ J : t h p y e q i bi?al ~ c ~ r ) ~ . a +duri :C) ?Q$c? t s I ' ih!:: p t 7 r . i ~ c i . f : +s t a t ? LJ0rft@-991:1E. .;Js"sL!UCC r_ictrii.?Q t i ' l i ' j ~~el-j.c'j a;\)? 5.37 PC;,- c9n2: ? ? . i i~"-laz C:.Fid.i .i f'lnirre 0 . F :nni a hlr 1 s r p e greed &.i.

pe:- ~ 4 i . 1 1 : . ~21 - ; i~ t~ (s . : . '1!3r=5 ! . -a tsa 04: growth r i i - i r t e sec~ri?dat-:r.eeCt0r' wan> i :f?at'. i \ / ha.:+ 1;;li.r. !i:ltiui?s.X I Keb-a la f a i l e d tijpaf-ti+k:& k-C)uyut,:.:.:,y 0.i: i i l ~ t ? r-t&tii7tt i* l ecanamy j t h e i t n m o c $ i a t . i ?r nclepsi .~dancepe r i C J ~ .

7'i;e eys4tirir Li .~rt G.!: the reqi oretai GC a r r c l n i , yruw+;h df.citr: bt-.csi-?c!Lt-encls i r~ :li\i+ :'tclt. i~-iial.cortctnll~p4r . f~ i r ~ n ~ l i c e- a phsncj:nennn that-we sha'1.: c o n t i ni\a to a?%%cr:-.de d:,,'.j F;$ t n e subseqi!urir-, ph&scs 67.5a -..

n&;rtianarpicite?-r., . 'f bus, f ~:ir. ?:a%pIe, w n i l t + ! f ond~ r i i . : i i ? ro~15 L.:?irc:.arcuunt .lar i;l


23/39

i r s t !":dl? u+' t.3:. f . . r r l t d r ~ .B u t i e a?ea nl'qdur commerrial c ra p it i I t-49 d;. >. SO ;:.I>&; l aL;-.r_ct- 's s h a r e 211 the total gros.5,:I. cippgo wc3a c.j lrn rrc!nci L u -* is*?. A , eta 1 . 1991? Thrt t *ea /peye: tn. ; . ! c r r p i ; h h v i i ;i>g ~ & s , : : ; : t ~ t ) r ~ per !cod and p r i c e t y c i t ?i I ? *J L ~L . ~L ! r \ > t e ~ i ~ t a 1 7 tid: t i 0 5 W ~ Lrc rweti r)wk be ~ 0 ? ' r e l ~ t 9 d> thet, t t.'17ct6: 1 i:la.s>% i ? ~ r t ccc-at~ n i i roi js i ~ h ;:!? dcd,nz!?ated th e n .~ iOrt~ l

5 i i. , 1 -2.- .V . : ; h a t - e t 3 i isrniil I t i S C C ~ Q ~ as i t1;ad i s t i rrcQ .ic i < a j * _ 0 : ~ t 7 ~ W I I ~ I IP O ! I I P B I - Y ~ ~ , h 9 n a t l c n a l pat t wn. 1 . h ~i i 1 i I L ; I e 2 1 - t a 1 er5trd ir:l31a r g e i 8 j f . t , d < - . r ? t e i t t t . ~ ~ - . ~ r . m t r ~ e ? . c i a I i ~ ~ t i o nrocerc i nr L . ! - 1 . "t v a r i c,ii+ ci?fi~~?kri,;i1 crops fucli asr 1-IC. ncti , L L;;- C L ? ~ ' ee ijttil c ~ s , \ ~ ? w' c q c r ~ . =?a t e r . td i n elementar J? I aF;.te I ,'J?IJic' : Non agra baseti2 I . : E c !)ctt.ablrl I tnpcir t i ~ ; ! ! : eI-i t i - t r . e . 3 ~y decade6 a+ theI W - ~ . I a , . n - i t i ~ m a l nu~r~tr?!'24C ~ ~ E ~ I I S'ai hiici I ~ I P ~ - + A t ae or I ea a1st. ,aiiw dv Ln T ~ a v ~ r ~ c o r t ?lilri!lqc P : ~ P I r t ie and . F IJ~-i.. *?i . I-?owever- t h e i r pr-eoence c.rcisi I t.5, f i i : . ~ . n y s i?;?if,:an; ctrarrge 1n the G V ~ I - & ~

1:c.=-!l3ismi~;;?~>~' i ; fi ,rs?. : ~ ~ ~ . - ? ~ ) C . C .;. QC L k+d ayt-an!--ocessing rrldustr te:.Ois ttie Gitcm i ta r~d i r r le s / p c . - t. O; iti.rq.keC1 c ~ S L O ; I ~ ; ndustricer co~11:dr.:(w orrly l ~ . r ~ r ~ t & - jt i t i~~t ' iu? . irun! tho i t i : , j ~ t l : . ; ) i \bst. itution % L i i t - < ya+ p larlneri dctbel uVi{tk?iZ ~?,riop;tci ;:.t t he r ~ a tanal 1evel . Or1 tg-feother. hand, th e pub1i c rector. investment i r t t i l a i r l d u s t t i a i asr:arw i ch i n tt1.s r ertiorr wat ; vr,-Si moaqfe ciurlng t1.1uper iod . The azber;:~p.+ pub1 c s~=ctor- nveshient r-rc.1 l ert;:ad th e f rnancial constr i t i i l t ~(5.) the scatti: gavel'rlticertt .old the t3 . i l u r e of regional w c i a l ar'tdp o l 1 t i cai pr'cssur E! gr-u~tps i > ensur inq adequate renI:r.a1i t lvest~nent . 'f'he r aqi 1 i i i 1 rapi ta l w a s more 1~credto tho p lan ta t io t~at id t r a d * %c?co r s +?.om ~ i rch tn e t.?:rupeane were e% ting. 'The nett-crauli niib t h a t hard1y ail,+ t r ow moderir l a r u s s ca l e fac tor ies c(rn14LIP i n t h u s t a t e dur ing tn e psr- lad.


24/39

i n t f?e I ndustrrj. ?.I. g r . . ow t z l wilbin c ~ f l ~ p a r s d t i or eceading ->wc;dccalus , p a r t i c 1 ~ 1t-1 v i n tV~o saut:17er.1? W:~ra lt CC)I - :S~ ti nij tbi:~r:j"Ld;? i leTt -ave rx t re - Cuc:li. r! u eg: arr C rhomas Isaac and 'I'tiaf'ctir.aiilCJOi. As c a n be seein . i : ranl tabl s 4 the s~cc j r idarySectur. grw* zito i 'e lat ivel y slu!.~$?i r t ;i t.13 d-tar'~.?. TS ti-$(? ska' te darnest:?.I r ~ Juc tdec! i ne.;. Fitt";l'~et", i k i i t ' l c;t?~on\jar ~ e t ' t a r ha.2.-?? 13-r

31te f i f t i s s and e e \ r Z i a ~, , i .ut ;>.e% b 8 c (~ard~ . t ; e t" i s eua ab i i ; k ~ d ~ d acanuiny 'n t i t p t iO W COnSLlmp 21 1i.l, !.Q w i ! ' l ~ t 3 9k i i l e f l < . . 33.!3i.t

l n d i a K e r a i aH 3 F P r i a e r y S e c onda r y fzrtlat-y PiDP Pr ind t -y S e c onda r y T~crtikr;v

---..."I"--.L---C-"------..----.------.-"-.-----..----..11 --- - - - - - - - L - - - - - - - - - - - . - - - . - - -!?JO-S1 'to 3.91 2 . 7 3 5 . 9 3 . 5.0.3 3 . 3 7 2 . 6 6 3.83 4.7;.I q b I - b S

1975-76 t o 4 . 4 9 2 . 5 4 5 . 2 9 6 . L l 2-39 G . J2 S .7 8 4 . 4 21988 - 89-C-.-----.--."---LI,-"---------L----------l . . l--.-"- --..-----..---..---------- .-..a- L - -.Source1 K e r a l a SD F g r o a t h r a t e For ,1950-51 t o 1 9 6 4 - & 5 cdlcu!atz!d f r9.q ?;l ied a t a p r o v i d e d D~ D e p a r t ~ e n t f Economics =r:cl Statistics, GGS: Fcl.

the o t h e r s d L Ckandak and P o l i c y Group 11390) and E z a ~ o n l cS c f v ? v1 9 9 2 .

The growth a f tire r egs anal @cl>i>otfiyt ~ e g irs ttcs acce?c rai'o t : : ' . a , :~around mid-six1:ias. S t i E, c e r t a i n l y a contras t @CJ t h e esperieric:?national ecatromy.. t'-:c+l..ala.s one e-f: ti?&@IN r3gioncs irk 1nci:in t.l-tkt':-


25/39

wa r : I mm u n e to t3e- !ecelm,dr=ibn 0.2 t h o ina ian economy f rm ti?+mid-'slxti~g. A s th e da.ta i i \ 'iablu 4 shawa t h e growth o f s t s t ??don~ekit i prodctct u.F Uerai trc I' j snli t~ : j .45 per cent per znnu~fidclrirty 19h4-t5 ta ICi'?";rF-i'SQ e r l c d whl le th e n a t ~ o n a l ncome g r u ~ t hrate declbnes Lo 3 . 8 per cent: p e r arincttrc.

T . . e rar;iurlai sgt- icuitilra1 g r z w t h iargel y maintained t h echonrantuin czvsri l n th e r t w pha s e , 'I'twre VJLS siyrti f i c a n t e n p r n s i o ; ~a.6 qv.oss i;T.appaa at-en i ! t the s t a t e i'rocr: 234s khourpatrd hectares EDSV)L% thousand t i9r iares betr.taen 1968-61 and 1974-73. The 1nc7 easeJ . ~ I t h ~ropptnq i r t t ens i t y and ce t sown area contr ibuted t o 31-expansion oi: gt-oscj ~ r o p p e d rea. The tt-errd of area under 80thcommercial crops and cerea l s t.i, expclnd, b u t t h e former at r+ a s t e r r a t e ? ccrnt.inued LC J p e r s i s t in the new' phase a1 .s~ .CSivanandao P.K. lYb43

A ntc;t-e.? r e m a rkatle ptrenooenorr, t h a t w a r sharp1y divsrqent+con the rtalll~!lai e x p e r i e i l c e , was the s i g n i f i c a n t step up ogr c g i ~ ~ a l nnustr~iaL produc t i on f r o m a i d - s i ~ t l e s i . I t has beat4p r anted auc that: i c i u s t r i e s such as enqinclet- ing t h a t contr ih~l teJb : l ) n i+ i c a~? l i to tire Sncfuz,tc-ial d e c e l e r a t im~ n l n d i a have very'Llt"te walq17tage ;i-I KeraXa sod that t h e divergence ft-ofi Thecratrcroa1 exp5.r 3 rnce m a y be e>:plairtob w i t h reference to the6~ e c z f i c i t i . e s 3 0. 6 regior!&l ~ n d b s t r i a istructure . KSubrahmnrao!

I , : . . f< . and CcjliatI*ti~Fjr 11ai , P. i L ~ 8% . urther, twro more p a i n t s #fayaiso be nilteo in t h i s c o n t n x t . F i r s t l y , t h e t r a d i t i o n a l aqrabased e ~ p o t - t induetries a r e w at a Caster r a t e than the nat i rna:averayacj .Far' heir pccxZuct groups. S C I . C O R ~ ~ ~ ,here@was a buneh~ngof pub1I C i n v e s t m e ~ ~ tnd a number of new induckrial s e c t w s wereo p e n e d up- New t -ero~rrcebased fjt-aauci: groups like rubbet-, ar?dpaper proaucts grew i n t o p r om i n e n c e .

X t wotild appear t ha t the decade ft-cim mid sixtzes, th e secendphase w also ane o f s i ~ ) ; r i f i c a n t s t e p up o f - the r a t e of


26/39

investment i n tl-re region. Tllo d i t . e c t central investment inKerala i i ler eased and the reyiorls share in the central public:sector rcse to 3.24 per cent ~ r i ri7e total by 19i'S. The percapi ta stair- p i an oxpenditur-e wh-rch Mas below t h e a l l fnaicrciver age d ~ \ rn g tlre f i r s f : .two p l sn t e r i ads exceeded the 1a t t e r if;t h e t h ~ r i l na ffr'jut.kh ptarl purioda . f w e noted, i n f e r i ng + i Cririthr? b a l d n c ~ 04 payman-L.9 pusi t : ~ u ~ ?-F K e r n la i n i97S 76 , rlrepr-eceacling year.{; r f i t r ~ thave taec? at?@ i h net in+'low I nvesti il afunds i i l t c , t h e regiui i .

Stranatign-,si nce M id-qpventi es'If>@bwcryancy rn th e procluci) \te i r c t i v i ties u+ t h e vttnomy was

ratiterg s h o t - t l i v e d . I r a w o f S!>P began to decalerato ff-onr r w n d tnii l - . 'severrt ie?s. The r a t e o f 01-crwth of SDP dur lny 197533-76.t o 1988-89 A S o n l y 2.59 per- csnt 1,erannLta - inuch lowor- thar't i nthe previous phase of. grmth as w e 1 . as t h e nat i cna l incornsgrowth ki).ictt i w s r a ~ ~ c ' j.4? per cent pat- ailnuin during the sam2period. I'he aec l i t ie i s e v i d e v t b e t ! ) i n th e pr imary and secondarysettor9 of the econ~my . There ~ a rn abso lu t e decline i nproduct ion a+ most c.~f t h e sgricut urd1 crops and output oi' tnetraditional it-~dustries:. The per caai ta output o+ agtrcul w e ,other p r i m a r y act~vities etid industry decl rned + r a m Rs. 385 it-I1970-71 to Hs.94H i n 19OV)--Ci7. Qn1v i n the t e r t i a r y sectors d i dthere occcrrad dn ac c e l e l - a t i ~ f i i n the grnwt)? - p a ~ - t i c ~ \ i a t - i% :C ~ s t r u ~ ~ L o nnd ~ O c l ~ ierv'ces. nrrspite t h e acceler-atf oil i i lt h e qrowth of the service sec10r, th e per capita o u t v ~ ~ t7a. jvirtually stagrrated during tile OulF boon decade 4rom 1975-?h 9231905- 86. Evidently, given t h e autf low of f ~rnds and i tnpavtleakages, which w e have discus~ed earlier, th e tmpact otremittances on domestic emplovasnt and output i n th e reqian ha5been m i n im a l .

In the a g r i c u l t w a l sector ooseibilities oaf expansion at t h eextensive margin seems to hava been exhausted by tlie mid . - s i x t i e s .


27/39

In f a c t , th e grosu. cropped ar ea dl?cl i nod to araund 2870 t;housa~?dheztarss by 1086-8'7. SoCc;r clecl i r ,e Ln i I S t sow\ area and croppinpintensity c o n t r i ~ t d e b to tile abovu outron~e. Urrl ike th e trofrd 50a , n the new phase t h e e:;pansi arr 0.c: t i l t ? commercial crops wasat thc expense of tho f crod crops. The, 1a t i e 1 - s share i n the gr&scropped area declined fro?n 4 1 per cent i n 1476-73 to 31 per ceni:in 1986-dl. W it h in t h e con~mc-rcial c r op s the area under cocanrit.and at-ecanuk dec'i i n & m i l d l y w t l i l r there was a phenomertrlexpansion cif area under r.ubber.. The ekpansion o+ coconuts intoth e paddy lands has rrot i!een sufficient to compenoate f a r ?.heSornters l o s s to rubber . The n at sawn urea under paddy dac1rfic;ci asmuch as by 20 per cant , a pat-t- of which tias gone +alLcw.LNarayana, D. et.al. 19913

In tho industrial aectar t h e r tcw s u l r i s e industries on w h i chelre rc&cional i r l d ~ t s t r i I recarvsry trd5 v i d l ng t;avn y e t to aci.'et h e i r presence -fel ;r: in ketaa lan crsrnwf?i e t r - a d it ianal resourcebased, sxpor t 0t. iantsd Ai :dc i s t r i e s 1 i s war-irte praaucts, cmrr.,cashew. wcjcjd, ceraml c e t c. arc? exper i er~ci-18 a phase stagnatiUI.Idue t o constr. i i i r \ ts can th e s~.lf ipj .y 0.6 1 . d ~ materials arid advcr.scmarket cot~b:ti.ansi t o r . +t\ricire pt-oductu. The per+orn;anre af publicsactar ragqed behirrc! .s!::par.:tat.ion.s artd there has been asi gni i card d s c e l or a t i un i rr I ' ieM pub1 i c srrc tor i vcpstmetrt

W l i v t h e p1entriFu.1 savings iJjd tiot flow into produciciveinvestments i n th e dotnost ic economy i n urdur- to cater t o the fastg r o w i n g consumption requirements a+ ?he peaple in t h e reqlocr ict h e c e n t r a l quastirsf? a+ ttte ccmtemparary development c r i s i s i nEerala. Gn answer would reqic.ire examination of historical vc v o l ved st r ac t ur es o f rsg i orwtl underdevti.1opment , problems r. Fresour-ce dopl&?tin and env i ranmsntal d&qr.adation, inappropriatrrdevelopment policies, cent re-state r . e la t i one , and so on - o taskbeyond the scope nf our present paper. A 1 l t h a t w e shall do.Cctl-thur i n t h i s dirert iori is t:o draw attention to the direct


28/39

i m p a c t uf i i ~ i y r a t f ~ nn th e labour &nd l a n d markets, th e ~ J ~ T V E P S ~e f f e c t 5 o f which may b s argued r o have reinfarced t n e tendencytowat-,as regi anal ccunainic s t t c p t ~ w ton.

Prversi.e,,.e.C.~~.?-,-a,f-.~r_n1-~.ra.f..li.qrf?&%set pre+t?rerrre f o r 1&!7c: and bui l d i c l y s wri.nnq t i?e tnaqrarlt:

hauseholds l a an a=pect c f which a i i t h e micro I e v e l studies a rein acjreafienr:, Even ttcauqt~ t1-m estimates of sxpendllutp.a cir~ti?&above two v a r y , j.ri a l l s t ~ t d l e a h e y account fo r the pr-epzjnderanlrp r o p o r t i o n of t h e migrant: hucrsettalds' irrcorrre a t t e r nrcwLing k hacurrent consumpti an espendi 'cure. The tt~arked d i # farence betheenth e mi grant and non mi gran t hausuhul d s w i t h respec.t; to h8~tsX qcc~ndat ians, land and y u l d acquisitiun haa becn well a a c ~ t ~ ~ a n t e d .

The above esset pr'eiersnce 14hic!?. tras been wi d e l y d e c v i ? ~ 1~ h i ) ~ l de ~ r n d e r s ~ u a dr l a betltei- pet-spectiva,. Fcjr. a ntaja!-i.ty oft h e , migrants, who anr;r;d 1 %ma%1 p a r c e la uf l arid pt-i av. tom ist-ati oft CPrakastt, a , cqt.ti s i :ic;n r,.f a mediu,r~ g i z e dh u h p l o t and c~ ~ ; ) i 3 ~ i d i ~ i r ~ ~ 2t a 5 a i a d d ~ i -to gaz n S U C ~ A ~reopectsbi j.ty c'arn~r;nw..irate ;i t h t h e : r e;7hartcsd b r!camct. The r m n 'f i nanr ial asss t s J i s l a n d , Gu i f d l ng and j e w e l 1e r y w i t hpuss i h i l i t i ~ s i of s l gn j f kcant can1 t:al gains was a l s o ra t iona lct'laic e gi-l,lan t h e i t - i r i i i tcr3 * Z rtaitcj a l rasaur.ces anden t . ~ ~ p i . - & i > ~ ~ l ral t.ai.en ts & h icti were u f tsn 1rtsuf F i c i e n t : +oractcceasf ul re1 F empi u>rt,tei?t vcritures;. f'her..:+ i nc- dcjrrbk ,~l;l.rati leE j ~ ~ l f nLgt - ak~ .~ r lc?rlt~ . ibut .ed ipnificantly ta a cunotructr~rjnbzomi n Kerai a. A v e ~ a g r -nun19ar ~ i : to~:sig p l anr, sanct i csned ar?nuallyin KeraLa duubldd between 1775 an d XVSB. The! s;cpansian a i t h econs . t ruc t i on sector' 1 5 alsa res f e c t e c i i n "c-ta ra p id expansion ofirlcsrr~e r i q i n . a t zng f r o m this sector LG. Bapl.kuttan, 17983.

The i ncreased demand f o r construct i bn 1nboctr wf t h i n Keral a,cmpXed ~ i t h h e migrat ion of s k i Xled construct ion workers,re e u l ted i r t r e l a t i v e s c a r c l t y o f these workers and escalation ofIztleir wage vates CWari.Xa1, K.Nm 1.9Q63. It has bean f o r c e i u l l y


29/39

argued t h a t the acrtclnomous increase in t h e wage r a t as i n t ! ~C o n ~ t r ~ ~ c t . ' . I ~ nector t . rm i jyered o f f sympathetic incraasQ i r l w q r !rates i!', ~ t t l e r ;&+2tors g i ten %Fre i n t e r r e l a t ed labour mark.ets t r u c t u r e s t h a t e x i s t i n t::erald CKr-ishnan, T.N. 1Y9lf. It w a i lb e h i g h l y u r i r & a L i s t i c to at%lcrbutet h e wage escalation i n Keralsto tl>c; r e z i t t a n c e indilcecl ~ u t - m t r u c t i ~ r ~oofit alone bu t there i a :ioneed to d i s p u t e t h a t i t d t d p l e v a n i rnowrtant ro l e and .that t t zc o n s t r u c L i u n sector aiztaci as 3 b.iacp l e a d e ? . The i n c r e a s e Anwaqes f a s t e r than i r~creclse i t ) p r ~ L \ CI v i - t y i n the agriruI u ~ ' a !sector i s c. i .aitnen to have nad n deletcrr.iaus, impact on outputemu1 y m a n t i n t h i c, sec to r LYann~n wr\d Pushpangadan, IT?@:Kr i s h n a i , , 1Br ' t 3 . Ct-a~pj .ngio e i ~ s iy dnd grass cul i v a t c d Idtic!decl n ed arid agri cul tu rd1 uu.tput s eaqna t ed . Despite th ed r c l r l ~ r r garaf i tabil i t y o f aqricultctt-a, iancl c o n t i n u e d to be apre+ev.red asset: h e l d i n y due tu. p w s ' ~ i b i 1 i t i e s o+ specuio%ivrprof j.k t h a t ccruid be maae i n a p e r ~ c d T- r i s i v g land pr ices,

I>herlomwnai i t ~ c r e a s s n l ar\d p r i c e s .tor I-es i ent ia1 51 r;,avail i n t h e F-ut-al rreas, has heun ~ ~ d e 1commented upon by k k ; ~m i r r - o 1eve1 s t ~ l d is 6 1 ~ i - : tOI?PC! e a r l i er . These ~bservat icsns w ecollabara?xcl by the avai. 1.abie t ime series dsta an Lana pcicl.5f o r s e l e c t ed v i l l a g a s LNair , P H G 1 9 B 9 ; Varqhesa,T.O. i9U7~.T h e clata prov ided b y the G11 T n l i c ~Dabt and Investment S ~ r v e y rreveal that t h e value a+ l a nd or~nac: y a r u r a l househol~:: i f (Kerala increased ty. dr011rrd 6@U ~ e r - cent. between 1971 and l?ifl .Dcr ing the pr-ev ious decade, t h e inoy-@age has been on1y cn I:?:eorder af 180 p e r cent. 'The aouve ~ s c a l a t i o n n value of 1 i d f t Jti9idlngc3 cart be on l y exp l a i ned b y a pr~snornanaLexp lo s ion I r l I * r l Jprices. Even a land ownst- w h o is i>ot keen on maximising- currerltincome f r o m th e l and would ho ld onto t h e l and for eperu la t i \ ~ rreasons in t h e above situcltj .on. Thus the erctraardrnarily b , ~ g i tl a nd prices may have acted as a balV.rier-to investment flows i ~ c oaor icul ture .


30/39

The above d t S+cu%iSI.tn wu~il apparertt l y seem to s.:tnpp&:)r-t: i e l ~ s, t h a t have i sceptical uf de\lei.apmsnt lmpac l c?+: t t ~ arumi t td f icas Ls@&! o r i S S U ~ ' ; ~ n\io: . J C ? ~ . I;:@&& artd I r a n P. 1.1. 1785;and S t a h i , C. 19863. On t h e cnnkrary ws w i s h to clnphasize t h a kthe developmental uu.tcai;ie need I I G ~ necessari ly tmve been as ithas accurt-eci 1n Ket-ala had the njrci.'a snvirunirtant in t h e stat$beer1 coniluei ve t o increasi sg aqri cul t2 ra2 p r ~ d u c t i v i y. Gf W T S Y S ~ .w h a t cuul d b e P ' A ~ ezl dss & d(c'.it i i s & aga i nst t h e davei ~jpm~ii 'kal .CunseqLtence 04: *:.he t -em1 ttscnces i is t.t.kat; t h e y have tended tc;t -n i r t farce t h s p r e e s i . s t i n g st.rueturc;?s3-C ur~der-C)eveLoo~~ts;nffa : : . ~ t t ? ? .than braat:: thztrr dawn. 4t at.,), rate t h e above d i s c u s s 1 c~rt 3 i*n

Section 4Reaional Economic C r i s i s a a f l e e d +or a ~ o t i e v eorientatitn

The var-9ous strantl~;o f disi:ur.sions 4.n tha prevxouu sc+.;cl.ics~.:n ttvs 1-agi orla1 domesti , product , ccrnrsumpr;i or!, i nvest.rnent,remi : tances, capital f laws and t r a d e b a l &nce i n var iu~css e c t i a r ~ s c a n be poricjdi sed ir\t.o . three d i s t i n c t pease5 a5 ispr e e e nt s d ~ r > t h e cl-tart haictw. T h e Ohas& :E aslerti ir ; tktrauqli t.i?e' C i f t i e k i and the early sixties, pnase 1 1 r a n g e e between mi

, el a w qruwth. Uni. l a t& - . a ~ , aymante o u t o f the acenomy i n tho Sut-mP e p a t r i & t i u t > r f f 7 c i a d a i s shadow .an expnrtsurplus or, t rade ac~oun,L. In t h e 9 h a . s ~ 1 ther--e is a s iep '-!p r'>+Irlvzzatficznt., p a r t l y .cinartced by InCI oh of p u b l i c s e c t o r invc;,itnc;i..~tand t h e g raw th r a t s a c c e l e r a t e s i n contrast to r e s t o+ India.


31/39

fikasec . i .Kg,u5k:q?>2a2;fie&ppaent si rice inaeoend1il.g----..-..------e ---.. _ _ r - - - - r - - - - - - - - - - - - - * - . . . . r - ..---..-----..- --..--r---------r------~------L----

h i s e r:,?;~:: h i r e i I I56% acd early 'Cis ait-'tb t o tiG-'78s aid-'19s through 'BOr

------------.-----.-----------C---------r------..---.----"------------------.-----------.----*----------

Fe: cap::^ fDPrrc!ative t o !orw i%er I eworindirn avhrapet- . - - I C I I L - - I - - C * I . - _ _ - I - - - . . - ^ - - - - . . - - - * - " - - ...-..---..---I..--. L-"---"--"-.---..---LI---II-.I---.-

' d r ~ t h f SUP: gins.?r $53: a r . ~ ~ i ~ ~ a t i p f i SW: d~eIetationJoaw t j c (!~ilbr nafi lkibr:er inan nat:r&al ilo~pr ban firtianal?ro6i.!itian itat i6nai rvst'aue! average)average)-.---------.-----.--"--.-.---I-.C--..-*"--.----------"------~------M--------"----------------Investrmt !on rises fa l l s--r--..---r------. --.----r--r-LI------~----r*-------------"II----lr-..--------

Cinsulli.?~m :ow Iw biqh-3cd ttaclca m n l y intwrtqional ~ r l n l y interregional f oreiqn reri ttante~ n i ! w s rew t tancelSDP raticc shrrqiyrlSC

relatively small de f tc i t s sharp increase in deficits

C q l tl kt autf ion kt rnCIaw Wet outflowf l c r w . ,,---.-~----.-Y----~---..L-.---.)---^-~-UUI----CC~--UI-------CI-..----C-U-II-~-------

31.:. i 44 is:3 4 .--. I I ile g t - c ~ \ ~ t hr G t i18 5re~ii:jnal ecanomy sharply.A ..a k : ~ e i?raf:cl.E; b:,c:t i i c r , '1'tte par zdax a+ law output. -i-?i.:) I:J:~;:U!~!@~?;fl i?ccir,s;;riiy;i.S .$ wc l i L t.i ite;i t2.c .inS'2aw o f remi ttanccps.DL(& tc tnc ! . i igij ~rfipc;ct pro! l tensitv t r l t s multiplier a f f e c t 3:i

G . 3 s . F L i i ~ ? i > ~ r -h e ~ ? K I : + s ~ $ ~ t i > d ~re channaixss.;j:i-IQ - 21~r 1v I I ~ ~.;i.ltfur- n e t 1end incj ou t s i de t h e retj ion.Th\.is r u e have .vat: ancrtl-tru- t:,ac.-adaj.:, "pat o,! t rade daf eck t. bacb.ruardr-t;gian i .;rldi r i q t.c! rest CI* It.~Tjia.

?tic t - s s u l t . 11~s eutr tfte emergence a+ a hiqh tonsumption .eci3non1y w1'2?1 d : ? &~ i : ~ ; a i -C ; p r~d \ . t i : t i i j i ~; .i i% @ . US car1 be :see17 ft-om the$01.1 o4ui I I ~;.!erci s the t c 3 t w ) . e:


32/39

, t-; O + f? i l i*here Y i s Income, i' dmestir, product aar?.dF( net: incfi,na - l . l isrrs + i - e ? ioi l . t r ide on accorkrlt cf + a r & ~ . g nssets 01- rerrtittanceo.

O = C + + < f ( - P l : r 12;where C is c:ur\srclr:ption, i rivestcnent X e x p a r t s and M 1rnp0rt.r;.

E 2s c + 1 E u -r { X .a r4) ( 3 iwhcrc E is e ~ p ~ r t c i i t u r a .Substi.:utirtq bata Cov 1988-81, wo ilave:

E u ,5585 - 2295 c 3854 u 4366 (4 )The tu ta i expendi ur-e $.a-he year 1'?9@-Bl is Rs. 4366 C J - ~ ~ ~ E ! ~ .-near1 y 23 per- cet~s'l lhgheF thkn t h e sLate dacz~estir,p:-oduct a+ Xs-39#9 crc5r.e;. The si u ~ t in Yeveal c t i le qragi 1 i t y 04. t ? ~ ?~ngi:*!>ajetch-tummy I n case of a ssriouc;d@cl ne in kf?u remittan+@ r 9 . f i . a ~.irorrt Middle East eiSkhar ddr 4 ;0 political. in : ; ta l .> i l~y c v , &I\)/ rjtF:err$actor-, t l ie preesnt expfrtai id-e eve1s i n the regiooaj. &Lr>ni;iitycan re ~lac~iktained an1 y t'ct-ough . zu l~s tn t i. a:. h~ r r . ow ' rtg st-d i +j. i?~?st(nert i:Clr.,.3m u ~ i t r ie t 1 7 ~ . ' S ~ ~ . U I - I . In the abse!kct+ sf Aii jcompefisatov.,i in4 low uf +unds .to the 13sc.l nc i rc r.@:.pii .i:ai-tresi,c;ri~%ufnptior) and I ;?vestment waul d ; ~ a v s;.a :,be? curtail eii, lria izt:\?'?.nrlaadif iq tc rever'ss r n ~ t l t i p l i e i - cori"ir?ctian o+ the a ta t e dmc. ; t i c9f'Cl'zd~C .L C ! ! q3 ..r:!:+d,t"

I presarrt p ~ t f . ! o+ oti!~eLuprhentis i : l ~ a r . ~ yosustninable.7 ' st t s r recet;.L i-;eveLuprnanirs I it khe qat:aclal acanony rras added ap a l 5r:ancy to -ki-ie ~;:iuatian. We have argued el jewt-tet-a 'ihak t t i ; s ;reqzcjnal terms CJ+ t r ade +clr ttie a i s l j .k e l y +u ttlave illaovarsq d i rec t i i f i . C'i'hamas Isaskc, Reddy, and Uuvvury, 14922I i k ttrt-s a.tner- ~ ; r.mar y cornctiodr k.1 6+x,pctr- tar-c, K e r a La d i d nutk~c+'fer r - a m acjverse t e r m s ti+ trade L O the l a s t +aur decades, Tf ie17t.1 Id dec l .ina dur ing 1960-.75 wjra m ~ l r ' t ? tnaf i campsnsatcr! by t k e~igoi+irwnt ncrease rrk t i > * t e r s t n s o# t r ade since mid-'70s. firdlunii~e most a$ t h o ;OY-icilary expor t cainmotlf.tfes t h e pr-'ice~iofcorfmioclit i e4; +ram Ksra3 a b i ci not crasl? af cr- the boom c4 mi d-'71Es.'Tho l a t t er en~oyed bauyant and r -e la t i ve ly s t a b l e denanr!


33/39

r a n d i t i o n s i n the interneitionnl market; and the protsctecl tnarketfo r rubbet- and coconut, wi th in I nd ia . 0 cumber- of fac'torsaf f e c k i n g t h e supp ly of K e v a l a 3 Sore ign e:.xpuvt coinmudi ties hadkept up the prices thcuugh the *first h a l f o f t h e ' 8 M s . 3ut g i ~ e nthe history of cyciical pa'i-tex.n of uutpat qr0wt.h ant5 prices ofttte psrer~i\idStl C : Y ~ ~ P : i s urti J. ~ . R Z t ielat P'.t>~%eanclf tion9 wi.11S U ~ i VB 1nCIeI:rrti te i y . 61 downwerd -i;renci i t - . the gr ices 04 ntdny crftho C0 f im~d 2 i e s ace already v i s i b 2 e . l i i t h e lunqer termcornustitintr to Eefald'a t .xpou.ts is lil:.eJy t.0 interroit'y froc!a SQUPCUS, 8nC supply . fn t l ~ at.i.anal market i t iscr r l l i ke ly that the present levrat Q+ p r o t e c t i o n and high prices for"rubber and c u c o ~ u t s ivzrrced f rc,n %he 2 nternat ional prices CaiIcont inur i rtdef i n i te l y qji verl t.he new l i $ere1i aki n p o l icy r e y ima.X i \ c m t r a s t , t h e prices e > f tfte ma i r ~ :il;tpou'f:catnmndities af KeralaSuch as grams, sugar, cetraert t , steel arid p9t.ro1eurn a re l i k e ) . y t ~ 'rise +aster Chc*r\ t h o qa!rc=;ral Q I " ~ . c ~;?vu.~.as ;in k t ~ e ast . Ti>+guiicy oS curraiiing t h e s ub s f dies is go ing to +wee ?,;erala bincrewsr rrgI y re33.y , art cspeil mar .ke t purchases. The i1e.i: recult: frlthe 1i k e t i hood of adveu'se mvernenl; 111 the terms oC t rade whichwould be a further- dray nn tho impruvemc.i~t the rsr?.X income 0:'tho regiun.

Y e t anattrecr di sturbi ny trend has been ?:t-~e ~ u r t tng evider~ccgrowing supply cotis trainks !Hi 4:fse regiorral expo?-ti; dcticrng t i h i !

eighties. Un1 i kcr! the perai6d bt?.1:~re r~id-sevent'icts regionalexpor ts hzvs tended 5 ataynate dLcrLng khe eighties. Trt:?u n ~ eq u l a t ed t rade generated cornpurs~ar~s nd ir.tc&nat:ives hakecaused resuurcs dey l e t i a r l &nd eco1ogicaX degt-adat ian w!tich tartarare leading to a dawnturc? o+ t h e expor ts bict a l s o af- fect ing t i t pother* sec to rs af the economy tt7t-ough w a t ~ i . c a r c i t y , depletion olLocal +acid ava i 1wbi 1 t v , raw material sl?ortages to cottageindustries, e tc . I t is ?) i f .+cult to ease tl~esr; anstra inta i n thest.rort run. In the sixties t h e r e a l incant& e+.ltect of the t n l l i fdeterraratian i n bar te r terms t o a ~ r u a t x t e n t t a a mi i g a t ed by


34/39

t h e rap id expanGron of the q u a n t i t y of exports . Th i s is not t h ecase today. it wauid anpear t h a t Kwala is a l s o ga ing to +ace'adeterlorat iart in t h e income t e r m s : of t r a d e in new phase.

'Thers is an urgent need f o r t - ~ o r ~ e n t a t i o n.6 t n a d e v e i o y m ~ n tpoliciaa a+ t h e s t a t e tcwards emphasis on the prokect lan uCcommon pt-aporty resocrrcesi end scological regenerati n g p r iovi .yf o r increasing the aqr icu l tural p r o d u c l i v it y by creating t h ee r x t ~ r n a lties tttraugh sc i e~r t i ic land-water management andap~ropt- . l ,a t i i f aci l it a t i i r g organ; uati. cml atructurae: ~mprcrvcfientand d i veru i ricstion a+ pr-nducts o+ ttcaii tionai i n O u 5 t r . i ~ ~encouragement to pramotr vat us addi i v n in the availaijleresources pr i ? r t i c u l ~ r l v Tuf ther pracesr ing activities in rubber,a l un l i r l i ~ ~ i ~ . ,ood P Y Q C I L ~ C ~ S e.trl9 and d i vorei C.icai:ion o f ' t P &i ndus tr ' ia l pvoductiun to nt tw nor1 resource based r n o u s t r i a lsactar-s that are? s k i 1 1 i r ~ t r n ~ ~ ~ v end h i g h value addiag in whichKerale c m l d have cornparativv advantage. .

Left t i , i t s e l f *.l\e t r ade h i l l only r e i i ? f ~ r c e ho existingstructures and i h+re f a~ . - e h e r e i s paramoctnl: need .For w c o n t i ~ u ssocial Zt=tsrvgntian tu g i v e a nc+ d i r s c t l o n to the developmentprucess . Hathev than i n i t l e . t z n g any new venturosSor: directproductidn the g ~ v ~ n i ~ i n tau got: ta u t i l l s e t its l i m i t e d Sunds+at- prov id ina r n+rastructurez. and incentives f o r the product1 VPi nve s tmen t :>+ t h e Cunds t h a t today flow i n t o l u x u r y C O i I ~ u m p t i O nor out a+ the s-tdte. #parat: +rom th e inefficiency of tho s t a t efiiachinery. t h e major hancfieap af t h e s t a t e governmcrnt ini l l i a s k 1% the lie?ver(a qiecsrl c r i s i s it faces t i < . I , .Gaurge , 1'3921. The cant1ncrous def i c i t s Sn th e revenue accountand t l ic fa 1 u r e to fund even th& modes t plan a1 ercations haveasen the recurring Seatur-e a+ Kerala'a budget$ far more than adecade now. Th e scope fur significantly cur ta i 1iny the


35/39

a d n ~ i n i s t r n t i v e r social expend~tures is vary limited. , Thepraspects af the Federal Fi.nance Comml~sions ak in g a generousview of the s p e c i a l problems are also not: brigtrt .

The financial c o n s t ra in ts a* t h e s t a t e strengthen t h earguments for review a f t n e prcesent investment p a t te rn andr - s + i x a t i a r r nf the priarxties. I t also incresses the relevance ofa more ducentr-al ued participatory development s t ra tegy tha t canl a p the l oca l resources and the urrutl.lir;eci man powor for t h acr eat iun o+ exxerna i j:ties in ay r i c ~ c lure and ecolagioalregeneration.

To go beyond the above g e r ~ e r a loutlines of a new strategy ofdevelopment is a u t ~ i d e he scape ~f th e presen t paper. fir rcuncfuding sentence w e s h a l l unl y reesmphasise th a t t h e presenttrade ?ad s p ~ i - i a l fa t i on based un harvesting of natural roeourceso r processinq trf . a g r ~ c u . l t u r . d ruducts has reached a dead end andthat i f t h e presetrt d r i f t a+ t h e Kevala economy continues thepr ,o spec t s f o r +uture are rattrsr. b leak .t Tho pvestmt working pa.prr forms a parst of a larger study ~ft r a d e and development expet-i ence o+ +::ern1. Some o+ the +inding6were pt-esen2c.d i n a sernloar organised b y ILO-CSRTEP a t Bangkok inQpr i l 1992 on Economic Consequences of G u l f C r i s i s . The authorswiah to thank 5 . Narayana and K.N. Harilal on an earlier versionuf th e present paper , J . 8raeE:umar +or Computat a n a l asmistancrand D m G i t - 1 .!a f o r t y p i n q r e r v i c e . 3


36/39

Centt -e +ar Il)evel~~pmerlttudies (1975): filgv~~~y--~~pfl&~-l_qy.m-e,r!~.,-+~Qe.yg2..~~,?1-gr!f::,uJ$..qy,,Unf t d Nat. ons , Nsw L'ark .L'narrdok 441 and Isuli:y Group ( 19881 : x.~.,?-i-?.-.?-


37/39


38/39

~rakas t l l. A, , : "pi-iv dk e Firtancing F ' i r i f i s in i t : AStudy", Erg, V c j i . X I X , No. YC9, i>ecembeb- 15, 1384,Radiiakv 1snnart , !:. i.r&c< J . b ~ ~ l h i ! r ! I Q G ; ) : "En?qrat ion, Ir.iw;trdI i anc-l Fi . l~rontic Dt?vpi ~ j g ) t i k? l ? t ' , " , ,'fhe fll~?~?,fie.er,.--j-g~trj:f+...l~.,va1,Ia ( 4 0 ) .

S j va 5 ~ 1 k ~ l 1 ' a i l l ~ r i i~ t . 2 : :!r~.I:el*-;;tate r Inker-R(9qianal8alancz 04: '!ra%dtt:: Safinc { - t i Com;;.i.:aticjn w i l s n $ i p ~ ~ i > . & LReference tu i r l ~ l j a ' ' ~.K ' ,FiI . T t i t : : ' ~ ~, !::enf.rce For Devsl opment S t x d ies'rt-tit-t~;ctai-iai;tapur-am.--.-........-.....---...-- -- -...-.-,.-- --.- iL39Y) : "EfC.eci:ivr Local Lev e l Dei v w yo f Hu.rila;, r7ssot;rcer; DeY/i-?.l pmer t Re ated P r o g r aromsa: The Case i341 r t i i a" : C t i r l ~ ~ t lan1 Fiqaeu. Pwc.), 4, C:NDP/ZSCUP Semi tarorl E f S e c t i veLucziil I,eue~. lie1 $ \,cwy a+ t-i!~,i?an F


39/39

'Thofiat; Isaac 7 . . and T'ha?-&!::an,Ili chae:!. i : An Enquivy i n t ot h e Niskar ical Fccm{-.s~f 1nduatrj.al f~acl;hnrdnsr;s 09: Kerala - &fitud.j/ OC 1'r .avs.n~~;-;?i n . , entre f o r-.i j eve l apment 5 t c i d i es , !h : ~nv&nari.tnapur. ic,1'lwnls.s : aa i 7 .M. a,id Duvvtt r i, i 1992 ) T r e n d ar?d Patter11QfIt : t e ~ . - S t a - t sr-ad& i l .!: Eeu-a:ia, ~?.rrt.~~.n:~-.--~;ip~t:f orthecsming) , Cen t r sf crr Deval p c r tw t 3 f : S-tudierj, 7't-IA uvartar~rt~apcrr.~m.Ver-ghestr f ..A , i YS?! . ''L.and I - . 1 ! Kal,-aZa w i t h SpacralH ~ . F c ? ~ . G ~ I L Bo Tr.ans!:ers i n two Vi Lsyas" , K . Phi 1 . 'T'heeis, Cuntrs.For i)ev.niopmsnt B3:ud:i esi , 1'3i +~tvanan-L!~.ap~ii-din,

balance of tfzak, fepixttpinceg llwd , net chpitfil flows : qn anqlvsis of economic development in...

Documents