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Mixed-Up Economy

Mixed-Up Economy
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If there is a place from which both the self-congratulatory tone of our captains of industry at Davos and the anti-free-market rants of the World Social Forum attendees seem equally deluded, it is Kerala. Even by the standards of the government's new sunrise industry of self-puffery, N.K. Singh's ode to the Indian economy at Davos, where he made much of its youthful population, seemed over the top. There is not much good having a young population when so many of them are illiterate or semi-literate and hardly able to read the instructions on a sack of fertiliser or decipher instructions on the factory floor.

With its schizophrenic history of high literacy rates and low economic growth, however, Kerala is also a lesson for the 'markets-murdabad' crowd that congregated in Mumbai; even high literacy rates cannot deliver economic growth if a state is hobbled by inflexible labour laws. Kerala's extraordinary literacy and low infant mortality rates are so often remarked upon that it now seems like a gift from providence rather than a replicable model for the rest of India.

While researching this column, I was struck by a World Bank projection of the late '90s. By 2005, it predicted, Kerala would need about half-a-million fewer primary school places. UP, the study projected, by contrast, would need to enrol an additional 24 million children by 2005 to reach the goal of universal education. The lackadaisical absenteeism of government teachers in so much of the north is not an option in Kerala: the panchayats keep tabs on the schools. Successive Marxist and Congress governments have learned that they ignore education and healthcare at their own peril. As one of the teachers in the villages around Kottayam explained—when I asked why he felt the need to offer extra classes to students—the parents would raise a ruckus if their wards fared poorly in exams.

In a sense, though, Kerala is not so different from the rest of India—it does a better job exporting people than exporting goods or services. Income from software exports of $5.6 billion in April-September 2003 was dwarfed by private transfers—mostly from Indians (including thousands of Keralites) working in the Gulf—of $8.9 billion in the same period.

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