Friday, February 1, 2013

Kerala -- Model?

GO TO moon and you can see a Malayali running a tea shop there, is a popular but cruel joke about the 'omnipresence' of Keralites in many parts of the world.
The highly educated Malayali is forced to move out in search of a job, as the State -- with its over politicised citizens who are generally known for their high level of awareness about rights rather than duties -- has failed to economically empower her.
The high level of Government interference continues to plague the State in achieving economic freedom by way of achieving investments or promoting entrepreneurship, if the Economic Freedom of The World report is to be believed.
With more and more States catching up with Kerala or even overtaking it, in terms of economic growth or welfare measures Malayali will soon have to invent new pastures for her favourite past time -- job hunting.
In fact, the great Kerala Model -- low per capita income but high quality of life -- is boomeranging on them.
Even strife-torn Jammu & Kashmir "is now among the best performers" with a low size of government and a relatively high economic growth, the report says.
Kerala's rank has steadily fallen from six in 2005 to eight in 2009 and 12 in 2011, according to the report. During the same period Jammu & Kashmir has shot up to fifth rank in 2011 from 20th rank in 2005. Haryana ranks first and Uttar Pradesh 20th now.
"Gujarat’s is a well known success story through much of the 2000s. Moreover it has had major successes in agriculture, social welfare programs, water resource management. All of this is being achieved without an inordinate increase in the size of the government," the report says.

A small solace for Kerala is with regard to the efficiency of the government in protecting human life and property. The State has improved its ranking from 13 in 2005 to 10 in 2009 and six in 2011.
When it comes to regulation of labour and business Kerala is notoriously famous. It maintains its 15th position as was in 2005.
"As India opens its national markets to international investment and commodity flows, it cannot afford to constrain its own entrepreneurs from benefiting from the great opportunities that lie ahead. For this economic freedom needs to be improved at the national, state and local levels," the report says.

How easy is it to start a business in Kerala?
The report measures this by estimating the time and cost of all starting steps including permits, inscriptions, notifications, and inspections. New Zealand is the champion in this respect--starting a business requires only one procedure and takes only one day. Egypt takes seven days.
Whereas it takes 30 days to start a business in Mumbai and 41 days in Kochi -- more than what it requires in China (40 days)! 
Kochi, however, ranks best when it comes to the cost of exporting a container -- just $ 432. The cost is  $ 1,289 a container, if it is exported from Jaipur and one has to pay $ 945 a container in Mumbai. 
Similarly, import cost-wise too, Kochi is economical with just $ 480 a container whereas it will take $ 960 in Mumbai and $ 1,384 in Jaipur.

Legal system
Court proceedings and enforcement of contracts too is far better in Kochi (just 700 days -- two years!) whereas it will take 1,420 days (almost four years!) in Mumbai. The National average is 2.5 years.
The report criticises  Kerala's grant of subsidy for paddy cultivation, and its  labour laws and regulations.

(Photo courtesy: Google)

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