Contradictions in Kerala? A Study in Wellbeing

Manhoman Agarwal

Professor Manmohan Agarwal has studied at the Delhi School of Economics and the Massachusetts Institute of Technology.
He has been teaching at the Centre of International Trade and Development at JNU for more than a quarter of a century. His teaching focuses on macroeconomics, band he has also taught Investment Finance and Development Economics. He has also worked at the World Bank and the IMF.

Ever since development economics emerged as a distinct sub-discipline following the Second World War, per capita income was considered the single most important yardstick of development. It is well established in development literature that with rising per capita income, economies undergo structural changes, characterised by declining importance of agriculture in GDP, accompanied with a rising importance of industry and then services.

Developing countries, therefore, saw industrialisation as the most appropriate path to economic development. This required an increase in the rates of investment and savings. With appropriate policies many developing economies managed to achieve higher rates of savings, investment and economic growth. However, persistence of unemployment and poverty across the developing world raised doubts about whether pursuit of economic growth was the only appropriate path for economic development. At the same time, people were increasingly realising the drawbacks of using income as a measure of welfare. The concept of development was, therefore, progressively broadened to the United Nations Development Program’s (UNDP) human development index and further to Amartya Sen’s concept of capabilities and development as freedom. Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi came up with a detailed analysis of a multi-dimensional concept of development in their report to President Nicolas Sarkozy in France. According to them, the concept of development extends well beyond material prosperity to include eight additional dimensions. Thus they considered nine dimensions in all that affect human welfare:

  • Material prosperity
  • Health
  • Education
  • Personal security
  • Economic security
  • Environment conditions
  • Personal activities
  • Political voice
  • Social connections

Inclusion of these eight additional dimensions presents a more holistic profile of the state of development of a society. We followed this generic framework and adapted it for India to design multidimensional measures of development to compare the performance of Indian states in the early part of the present decade. We took eight dimensions including material well-being but excluding personal activities for which data was not available. The indicators for each dimension were chosen, keeping in mind the Indian context. We combined the eight dimensions into three broad measures, (i) human development (HD) [consisting of the dimensions of material well-being, education, and health], (ii) security [consisting of personal security, economic security and the environment condition], and (iii) political voice and confidence [consisting of political voice and social connections]. We used a non-linear non-compensatory method to construct our measure. We found that in the usual compensatory measures, very good performance in just one dimension can lead to a very high ranking in the overall performance despite poor performance in many other dimensions. This does not happen in the non-compensatory measure. Furthermore, this measure does not compute assign a score to the performance of individual states but only provides a ranking.

Our results show that no state performs uniformly well across all dimensions. Smaller states, such as Goa and Himachal Pradesh and many of the North Eastern states, perform well and many larger states including Bihar, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh, perform poorly. Some of the states conventionally thought to be doing well, such as Maharashtra, Tamil Nadu or Gujarat, turn out to be average or worse in overall performance (with ranks 13, 17, and 20 respectively) because of their poor performance in a number of dimensions. Maharashtra and Gujarat do poorly in environment and political voice, which was measured by voter participation, women participation in electoral competition and judicial efficiency depending on the ability to dispose of cases. Gujarat also does poorly in health. Tamil Nadu performs poorly in economic security, health, and social connections. Among the larger states Kerala and Punjab perform well. Kerala is ranked sixth overall whereas Punjab is ranked seventh.

Kerala’s overall rank is a combination of very good performance in human development (rank 3) along with barely average performance in the other two sub-measures (rank 18 in security and 17 in voice and confidence). It does well in all the three dimensions of HD with ranks 1, 5 and 3 for material prosperity, health and education respectively. The high rank in material prosperity is mainly because of good housing, which may be largely attributed to the flow of remittances by people from Kerala working in the Gulf, highlighting the benefits of Kerala’s migration experience. Likewise, the indicators of learning outcomes under education and infant mortality and immunisation under health are quite impressive for Kerala. One reason why Kerala performs well in HD could be its dominant plantation sector, as in the case of Sri Lanka. The plantation sector uses large amounts of labour, which was primarily indentured from India in Sri Lanka under the British rule. The British Indian government felt a moral responsibility for these workers and ensured adequate availability of social services that raised the levels of HD in Sri Lanka. A similar process would have been at work in Kerala as well.

The two indicators under HD in which Kerala’s performance is relatively poor both pertain to health – inadequate access to safe drinking water and the extent of stunting among children. In fact, the latter may be a result of the former. Kerala performs very poorly on economic security where it ranks 27, the second worst, and low percentage of the land under forest cover. It also has a poor record in road safety with a large number of road accidents. The poor performance in the area of economic security is because of the high levels of unemployment and a very large share of the people being in informal employment, and a high percentage of indebted households. High unemployment and dominance of informal employment are a reflection of the very small share of both agriculture and industry in the state’s gross domestic product. It also explains the lure of migration to the gulf. Another dimension in which Kerala does poorly is social connection (rank 25) because of high suicide and marriage failure rates. It is often contended that large scale migration has caused significant social isolation and stress in Kerala. Thus Kerala’s integration with the global economy has proved to be a mixed blessing for Kerala’s multidimensional development.

To understand Kerala’s relative performance compared to other states, we considered all 29 indicators capturing the eight dimensions to construct outperformance matrices showing the number of indicators in which each state outperforms another. Taking the net difference between the number of indicators in which Kerala outperforms another state minus the number of indicators in which that state outperforms Kerala, we find that only 5 states outperform Kerala on balance, all being small states. Manipur and Nagaland in the North East have a net advantage of 4 indicators, and Goa, Himachal Pradesh and Sikkim have a net advantage of two indicators. Kerala, on balance, outperforms all large states.

In conclusion, Kerala displays an impressive overall development performance in comparison with other states in India. Kerala’s main weakness is on the economic front with high levels of unemployment and a high dependence on the informal sector. There also seems to be considerable social stress reflected by high suicide rates and high rates of marriage failure. However, Kerala does very well in aspects of material prosperity, education and health. It has good quality housing and it enjoys low levels of infant mortality, high levels of immunisation and good learning outcomes. Performance on health would be even better if more safe water could be provided.