Kerala 2005 - of Planning Commission

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that base, but primarily deals with the second-generation problems of human
development, such as quality.
However, a number of doubts have been raised as to the sustainability of
such a ‘model’. The significant sources of social development of Kerala were
higher Government spending on related infrastructure in the compelling
backdrop of welfare policies pursued since the middle of the 19th century
and also the huge remittances from non-resident Keralites from other parts
of India and abroad, especially from the Gulf countries since the mid-1970s.
The feasibility of continued State financing of social services was put under
pressure, especially following the fiscal pressure felt across Indian States from
the mid-1980s. Similarly, with the prospects of continued Gulf remittances
being uncertain, that source also remained unreliable. There was thus a big
question mark over the future of human development in the State in the face
of a fragile economic base in terms of an insignificant industrial sector.
However, these fears are now receding in the face of what appears to be
the new ‘virtuous’ phase of Kerala’s development: human development and
economic growth seem to have started reinforcing one another positively, in
contrast to the earlier experience of ‘human development lopsidedness’ (with
weak economic growth). 2 No doubt, the dynamics of such ‘virtuous’ growth
in Kerala is based on the comprehensive plane of human development,
flourishing in the wider sense of human capability that captures both the
utility-enhancing (as an end-in-itself) and productivity-enhancing (human
capital as a means) values. And this broadly explains the revival of Kerala’s
economy in the second phase (since the late 1980s), when all the three
sectors – primary, secondary and tertiary – presented an impressive growth
momentum. However, such dynamics would not have been possible but for
certain necessary enabling conditions – demographic dividends, emigration
and certain economic reforms – that have collectively acted as the engine of
‘virtuous’ growth in Kerala.
2 We have attempted to view Kerala’s current ‘turnaround’ within the Ranis et al framework (see Ranis, Stewart and Ramirez, 2000).