Growth vs Resources

Kerala a small State in India is one per­cent of India’s total area and nearly 2.7 percent of India’s Population. Similarly State’s density of population is almost three times the national average and hence per capita land availability is very low and it creates land utilization issues. Kerala is a land scarce economy creating concern over food security and employability. Even in 1950s, state could produce only one third of its required rice and the gap has been bridged through import from other states. However, the efforts put forth by successive state governments could not promote rice cultivation as envisaged under the last eleven five year plans, although state spent nearly Rs.5280 crores as plan fund for agricultural development. Out of state’s cropped area of 30 lakh hectares, 25 lakh hectares are irrigatable and hence state spent nearly Rs.4421 crores for irriga­tion under five year plans during 1950-2009. Out of it, Rs.3109 crores was on large and medium irrigation projects and Rs.1212 cores on minor irrigation. However, state could irrigate only 4.58 lakh hectares which from only 17 percent of cultivating land. There are at present 28 major and medium projects in Kerala, out of which ten are completed and 18 are ongoing under different stages of construction. It shows that state efforts and ef­ficiency in the implementation of irrigation projects are neither monitored nor evaluated by State Government or by state planning board. Similarly in the formulation and implementation of large projects in sectors like irriga­tion, power, roads, bridges, buildings, industry and water supply, priority fixing criteria in the selection of projects and capital fund earmarking are neither need based nor capital resource availability. For instance, Kallada Irriga­tion project was started in 1962 at an estimated cost of nearly Rs.12 crores. The project was later revised for World bank loan and the project continued for years and after spending nearly Rs.600 crores, it was only partially commissioned. Neither the state government nor the state Planning Board had put effort to correct the devia­tion of the project or to complete it as envisaged origi­nally. Similarly the 18 ongoing irrigation projects in the state range from 14 to 33 years old. It shows that resource scarce state, Kerala, has to evolve an efficient management technology for priority fixing of large scale projects and fund earmarking to avoid resource crisis.

State moan that Kerala is a resource scarce state and hence State’s revenue and fiscal deficit are increasing. But state fail to evaluate whether scarce capital resources are utilized efficiently. State could not achieve 5 percent annual growth rate under any first seven five year plans (1950-90). As a result state could not create a strong economic base for capital investment necessary for sus­tainable growth. However, annual GDP growth rate has accelerated in recent years. For instance, annual growth rate of GSDP reached a high level of 10.09 percent in 2005-06. But it decreased to 7.9 percent in 2006-07 and again increased to 8.95 percent in 2009-10 and to 9.13 percent in 2010-11. It shows that Kerala Economy has the capacity to attain a two digit annual growth rate. How is it possible? It is possible because state has a strong investment potential and consumer market potential. But state planning board does not evaluate the potential and formulate development strategy.

Total Bank deposit in Kerala is not only increasing but very high. Total bank deposit in Kerala was Rs.161562 crores in 2011 as against Rs.77677 crores in 2006 and Rs.38619 crores in 2000. In other words, during the first decade of the 21st century total bank deposits in Kerala increased by four times. With the increase in bank deposit, credit deposit ratio also increased in Kerala to 76 in 2011 as against 68.70 in 2006 and 41.28 in 2000. It shows that when total bank deposits in Kerala increased four times between 2000-2011, credit deposit ratio did not increase proportionately. Out of state’s total bank deposit NRE deposits were Rs.37690 crore in 2011 as against 30671 crore in 2006 and Rs.18724 crores in 2000. The major question that emerge in the Kerala economy is whether we are able to mobilize bank depos­its for productive investment.

Kerala economy, as mentioned above, is growing annually around 9-10 percent in recent years. If it is sustainable, state’s GSDP will double in 7-8 years which will be a great achievement as Kerala is concerned. But still state’s deficits and debts are alarming since internal debt has grown annually at around 14.6 percent during 2006-11. States internal debt has reached to Rs.56288 crore during 2011-12 as against 25670 crore in 2005-06. In other words, over six years internal debt has more than doubled. Similarly states total debt has reached the level of Rs.88746 crore in 2011-12 as against Rs.45929 crore in 2005-06.

Debt-GSDP ratio and per capita debt liability are the two indicators that would concern Kerala in the coming years. Among all states in India Kerala has a high Debt-GSDP ratio and per capita debt. While the debt-GSDP ratio of Kerala is 31, in 2009, all states average is only 27 as against a low level of 21 in Tamil Nadu and 22 in Kar­nataka. Similarly, per capita debt in Kerala is Rs.18042 in 2009 while all states average is only Rs.11086 as against Rs.l11290 in Tamil Nadu and Rs.10182 in Kar­nataka.

Why in Kerala, Debt-GSDP ratio and per capita debt burden are increasing when compared to other states. The answer is simple. We are less efficient in resource mobilization and its utilization. We utilize fund. But it is without criteria and priority. Therefore the number of ongoing projects are increasing resulting in cost escalation and resource crisis. It finally leads to resource crisis.

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