Kerala 2005 - of Planning Commission

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further improvement on the human development front
now depends critically on the expansion of decent job
opportunities, which in turn depends on the nature of
the growth process. The CDS-UN study clearly identified
educated unemployment as one of the most serious
problems, and discussed it at length in a condition
of high social development. The first few Human
Development Reports of the UNDP, which seemed
to have drawn positive lessons from the successes of
Kerala on the social front, seem to have underplayed
the importance of economic growth and its inevitability
to generate productive employment and to increase
wages. The Human Development Report 1996, for the
first time, dealt explicitly with the relationship between
economic growth and human development:
The record of economic growth and human
development over the past 30 years shows that no
country can follow a course of lopsided development
for such a long time – where economic growth is
not matched by advances in human development,
or vice versa.
The transitory nature of lopsided development,
as indicated above, triggers speculation about the
alternatives. Researchers have articulated the basic idea of
the possibilities of two diametrically opposite alternative
consequences of lopsided development, in terms of what
they call “virtuous and vicious cycles of development”
(Ranis, Stewart and Ramirez, 2000). From this perspective,
two distinct causal chains may be identified. One runs
from economic growth to human development, and the
other from human development to economic growth.
These causal chains may give rise to a mutually reinforcing
upward or downward spiral. High human development
may lead to high economic growth, and this in turn makes
possible a higher level of human development. As people
become healthier and more educated, they contribute
more to economic growth. Conversely, low human
development constrains economic growth, which in turn
stymies further human development.
Accordingly, countries may be classified into four
categories, virtuous, vicious and those belonging to
either of two types of lopsidedness: human developmentlopsided
type (that is, strong human development but
weak economic growth) or economic growth-lopsided
type (weak human development and strong economic
growth). A significant finding of the cross-country
study cited above is that “while human developmentlopsidedness
permitted movement towards a virtuous
cycle, in the case of economic growth-lopsidedness, all
the cases reverted to a vicious cycle.”
Kerala’s potential for economic expansion, implicit
in human development, had not translated into actual
achievement till the 1980s. However, the State had in
the interim avoided slipping into a situation of slow
improvement in human development largely because
private expenditures seem to have complemented
public expenditure to finance health and education. 3
In the light of the prognosis made in HDR 1996,
Kerala appears to have passed the phase of lopsided
development, if one takes into account the recent
economic growth. Several studies have now come up
with the observation that growth has not completely
eluded Kerala after all. 4 But does it indicate the advent
of a virtuous cycle? Our Report probes this issue in
depth within the approach outlined above.
4. Organisation of the Report
What we have discussed so far constitutes the core of
the framework of analysis as well as the approach of
this report. It argues for strengthening and enhancing
the scope of the ‘virtuous cycle’ based on Kerala’s
– no doubt, remarkable – achievements in human
development. In the light of this, the Report has been
organised as follows:
Chapter 1 presents an overview of Kerala’s development
experience and the processes that shaped it, touching
upon critical aspects of the current growth process,
such as emigration, a dynamic service sector,
decentralised governance and the persistence of
educated unemployment.
Chapter 2 summarises the very many achievements of
Kerala in human development, assessed in the space of
non-income indicators, including demographic, health,
nutrition, education and infrastructure indicators. These
achievements have continued, belying the predictions
of those who doubted the sustainability of the Kerala
‘model’ of development.
3 For instance, nearly 60 per cent of those who receive hospitalised treatment in rural areas, and 61 per cent in urban areas, go to private
hospitals. The number of ‘private unaided’ schools (which run mostly on students’ fees) and self-financing courses in colleges have
increased dramatically in the 1990s. Remittances from Keralites working outside the State provide the vital link in this chain of argument.
4 For example, see Subramanian and Azeez (2000); Ahluwalia (2002); Pushpangadan (2003); Jeromi (2003); and Kannan (2005).