The UDF-led government in Kerala is promoting a positive economic narrative amid a backdrop of declining rubber prices and rising household indebtedness. Despite the government's focus on flagship projects, the state continues to struggle with job creation and economic diversification, especially in the IT sector. The document highlights a significant disconnect between the government's optimistic claims and the harsh economic realities faced by many households in Kerala.

1. Boby Kurian & Shenoy Karun | TNN
Kochi: The Oommen Chandy-led
United Democratic Front (UDF) is
blitzing Kerala's languishing eco-
nomic story with a feel good nar-
rative. As the main opposition Left
Democratic Front (LDF) and an
increasinglyassertiveBJPraisethe
electionheatinasultrysummer,the
postcards of Kerala economy are
mostly familiar vignettes.
Consider these: falling prices of
rubber and other cash crops have
frustrated over a million house-
holds and is shrinking Kerala's
economy by as much as 3% annu-
ally.Thebottom20%householdsare
grappling with 'disguised poverty'
inastatewithoneof thehighestper
capita indebtedness in the country.
Kerala's potential to attract IT in-
dustry has delivered just 70,000 jobs
over the last two decades whereas
51,000studentsjoinengineeringcol-
leges annually.
None of these will find mention
in an intensely fought assembly
election. Ironically, even when the
incumbentgovernmenthasclaimed
that a lift off in marquee projects is
spurring business sentiments.
KochiMetro,afourthinternational
airport near Kannur, a deep water
container terminal in Vizhinjam
and completing first phase of the
long delayed Smart City are talking
points for a government battling
well chronicled anti-incumbency
syndromeinKerala'selectioneering
process. The Startup Village, which
is aimed at boosting entrepreneur-
ial action even among college stu-
dents, has made tentative progress
with little interest from private in-
stitutional investors who swoop
down on interesting ventures.
"UDF has managed to keep the
focus on flagship projects in a state
wherenolargebusinessactivityhas
taken off in recent years," said C J
George, founder and managing di-
rector,GeojitBNPParibas."Butthis
doesnotmeanwehavestartedtack-
ling the state economy with a holis-
tic view," he added.
Are a few big projects and lurch-
ing startups hauling in better pros-
pects? A consultant to World Bank,
CSRenjit,saidthe"multipleindebt-
edness"of thelowestincomehouse-
holds carried ominous warnings.
"Usually the household takes a loan
from micro-finance groups and
raise more debt from the local
banks, most probably to educate
theirchildren.Theycouldalsohave
pledged their jewellery with gold
loan companies, while asking for
hand loans from the households
they are currently working for," ex-
plains Renjit, who works for com-
munitydevelopmentprojectsof the
World Bank. The latest National
SampleSurveyOfficestudyshowed
Kerala figured among the top five
states for per capita indebtedness
withruinousimpactonfamilylives.
The sharp drop in rubber price
alonemayhavecosteconomy$1bil-
lion,oraround6,700crore,annually
(based on the multiplier effect on
localeconomy).Allcashcrops,with
the exception of pepper, have de-
clineddeepeningthecrisisforgrow-
ers who can influence the election
outcomes in about 20 constituen-
cies."Thecrisisperiodsineconomy
have short and long term effects.
Research shows that it impacts
health and education of children
who lived through it," said K J Jo-
seph, Ministry of Commerce Chair,
Centre for Development Studies
(CDS) in Thiruvananthapuram.
Rubbergrowersareoftenbold,high
velocityspenderswhocanspureco-
nomic activity in untypical ways,
he added.
Kerala's search for a job market
miracle in IT has been a mixed bag
atbest.Thesoftwareexportsrallied
from Rs 420 crore a decade ago to Rs
15,000crorenow. Thisstillcontrasts
poorly with other southern states
despitethefactthatKeralafirstcon-
ceived a technology park in India.
Kerala's outsourcing jobs are esti-
mated at 65,000 to 70,000 even as
Tamil Nadu and Karnataka have
marched ahead with four lakh and
11 lakh jobs respectively.
IT hasn't delivered a new middle
class consumption story, as the
country's most literate state contin-
ues to ride on wobbly commodity
prices, remittances from the Gulf
and small and medium enterprises
in tourism and manufacturing. Ex-
perts have argued that this script
faced dangers in context of de-
pressed oil prices and the volatile
westAsiangeopolitics.Kerala'spio-
neering tourism legacy has faced
rising competition from other In-
dian destinations and Sri Lanka.
The annual luxury car sales in the
state has remained stagnant at
around 1,300 units in the past three
years, though some brands like
Mercedes Benz expanded dealer-
ship footprint.
Kerala's election rhetoric is
often targeted at community vote
buying. The state, which hasn't
had mainstream economic cri-
tiques after the passing away of
KN Raj (who co-authored India's
first five-year plan), desperately
needs a fresh one.
The Congress-Led UDF Government’s Triumphal Narrative
Doesn’t Match Economic Realities On The Ground
Flattering To DeceiveTOI