The Kerala Conundrum

Kerala is known all over the world for its lush landscapes, sunny beaches, and peaceful and pleasing backwaters. It also defies the stereotypical Indian state. This state has a lot going for it, and the following just touches the surface:

• The highest human development index in India
• The highest literacy rate (more than 90%) and life expectancy, lowest infant mortality and the lowest school drop-out rate in all of India
• Thanks to a matrilineal society, women are by and large more empowered than in most places in India
• A low population growth that competes with Europe and the U.S.
• Lowest levels of rural poverty in India because of pioneering land reforms in the 1950s
• Best welfare state in India because of decent state-funded health care and education

Even with all of this great social progress, this hasn't exaclty translated to the economic end. Joblessness is a problem. The literacy rate is a paradox because there is no place for the highly educated people of Kerala to work. The money shortage might be the greatest paradox of all.  People migrate away from Kerala because of the lack of jobs. Kerala is almost entirely dependent on tourism and remittances sent back by the two million people who live and work abroad. Because of this and the lack of a manufacturing base, economists call this a "money order economy." Even Kerala's biggest industry, tourism, cannot draw as much money because the sevice tax is a federal tax which first goes to Delhi. Because Kerala fulfilled all of its millenium development goals, the central government has spent its money on tackling poverty and illeteracy in other states. 
 
Now that there is little money, the cost, quality, and service of health care, education, and electricity is high, which many poor cannot afford. Usually the vast social development would trigger economic development like it has in other East Asian states. However there is no real push for innovation. Analysts say that Kerala is an over-politicized and over-extended state. The government is being pushed by a few radical unions, which are acting as pressure groups who advance only particular interests. Kerala's model has no new agenda now that the old one has been filled. It cannot rely on expatriates forever. It needs a new focus so the state and its people can move ahead and build on its already impressive resume.