THIRUVANTHAPURAM: The Kerala Perspective Plan 2030 warns that the state could get stuck in the 'lower middle income' rut if it continues to depend on its traditional drivers of growth like remittances and tourism. What's more, the document prepared by the State Planning Board considers the state's huge spending on social welfare as unsustainable.
“Kerala will find it difficult to sustain the pace and pattern of domestic consumption-driven growth that it has been enjoying for the past 25 years, because the consumption drivers of the economy are vulnerable to internal and external dynamics,” the document states. It cites a handful of reasons why emigration could turn out to be less attractive in the years to come.
The supply of emigration-ready youngsters will see a decline. This could be due to declining population trends, ageing of the population and rapidly narrowing wage differentials between Kerala and the Gulf in the last decade.
Then there is competition from states such as Uttar Pradesh and Bihar. There is also the increased cost of emigration from Kerala.
Perhaps the most compelling argument for a decline in emigration is the increasingly restrictive immigration policies of the host countries due to growing domestic unemployment being faced by them.
That Kerala tourism is not immune to external shocks was evident during the economic recession of 2008. For five consecutive years, tourist arrivals recorded an alarming fall.
“The scope and magnitude of these impacts has been severe. The World Tourism Organization (UNWTO) in a publication (2010) estimated that international tourist arrivals fell by four per cent in 2009, and that many destinations in the world reported negative growth,” the document states.Finally, questioning the very logic of Kerala model of development, the Perspective Plan says that “government expenditures on welfare cannot be sustained unless the resource base is widened by increasing productive capacity in the state.”
The fact is the state has already started cutting down on its social welfare. Large fiscal deficits have forced the state to cut down on social expenditures. Once consumption stimuli slow down, economic growth will also taper off, the report says.
