Kerala's trimmed plan

IN WHAT COULD well mark the beginning of a more realistic approach to drawing up the States' annual plans, the Planning Commission has scaled down Kerala's outlay for 2000-2001 from Rs. 3,535 crores to Rs. 3,317 crores. The Deputy Chairman of the Commission, Mr. K. C. Pant, was quite open in pointing to the limitations of Kerala and its identifiable resources now. Despite its claim to the highest tax to State Domestic Product ratio, Kerala has not been able to generate the kind of revenues to fund a larger plan. The Chief Minister, Mr. E. K. Nayanar, appears confident of bridging this Rs. 218-crore gap through the expected enhancement in devolution from the Centre, under the 29 per cent formula. Along with a better tax collection, the State could well raise resources of over Rs. 3,500 crores. A couple of days ago, Mr. Pant agreed to a 40 per cent increase in plan outlay for West Bengal, but the Planning Commission decided to peg the core plan size at Rs. 5,658 crores against the approved outlay of Rs. 6,343 crores. Here again, the Commission was led by the identifiable generation of resources. This process of hands-on planning must be carried forward with a mid-year review of each State's plan to ensure better utilisation of resources.

In the case of Kerala, the State's achievements in the social sector are enviable and must be attributed to the high literacy rate. It boasts of the lowest birth and death rates, achieving replacement level fertility rates. The free education programme, up to the higher secondary level, and the successful health care delivery system have made it possible for Kerala to attain creditable social indicators. But that does not help the economic performance or boost the State's revenues. It is only through the industrial and service sectors that Kerala can generate more resources. No doubt, the services sector is doing well - particularly tourism and hospitality. But industrial development has been patchy. Except for the plantations and a couple of other sectors, not many industries have gone to Kerala. It is only in the past couple of years that a serious effort has been launched to attract more industries and develop the information technology sector. But for the hotels and resorts, not much of investment has flowed into Kerala. The expatriates contribute the bulk of the investments. This has to change and for that to happen, the State needs to undergo an image correction. Many industries are wary about labour relations in Kerala because of the power of the trade unions in the State.

It is one thing for Kerala to seek a larger Central sector investment or a larger share of the taxes collected. But that will not take the State very far. With the economic reforms and the disinvestment mode now in place, there is no use in waiting for Central projects. The future lies with the private sector and it is for the political parties in Kerala to come to terms with this reality. They cannot afford to persist with the sick and highly subsidised State undertakings - be it State Transport or the Electricity Board. There will have to be a practical appraisal of service charges or fares so that these units are viable. Otherwise, they will have to be corporatised or privatised before long. The best course for Kerala is to invite the private sector to team up with the State and its public sector ventures to draw up a new road map for infrastructure and industrial development. Unless that happens, it will be difficult to find investible resources and generate employment. In an era when States are competing with each other to woo domestic and foreign investors, it is time for Kerala to shed its past image, evolve an industry-friendly policy and identify a clutch of sectors that can provide a thrust to industrial development.

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Section  : Opinion
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