Kerala – A Communist run utopia? – An overview of the success and failure of the “Kerala Model” post-covid
- Aaryn Singh Kang
- Sep 30
- 4 min read
This article was written by Aaryn Singh Kang, a student in the United Kingdom.
Kerala is one of India’s 28 states and has a population of 36 million. The state has been continuously governed by left wing (often Communist) governments since 1957 and is both politically and ideologically detached from the rest of India to the extent that until 2024 Kerala was India’s only state where the Bharatiya Janata Party (the nation’s ruling party) had never won a national seat.
Kerala functions as a capitalism-embracing, social-democratic welfare state. Since 1957, Kerala has acted to improve its economy through societal means such as by first prioritising sustainable, social and human development (notably in education and healthcare). This has been widely regarded as the “Kerala model” for socio-economic development.
Kerala’s socio-economic paradox – Social gain and fiscal pain
Today under the Left Democratic Front led by the (Marxist) Communist Party of India (CPI), Kerala suffers from a lack of revenue sources, high levels of debt and limits on fiscal autonomy and yet despite the state’s profound fiscal distress, Kerala has maintained and improved its societal position resulting in a paradoxical situation.
Kerala ranks as the least impoverished state in India (2023), scores the highest HDI (human development index) (0.758) of all major Indian states (2022) and excels in healthcare (e.g. has an average life expectancy of 76.35 years (2024). Yet despite these profoundly positive social indicators, on the 22nd of December 2024, it was reported that Kerala had the 4th lowest economic growth in the country at 3.16% in 5 years. In addition, the state has gained an infamous reputation for unsustainable fiscal management: Kerala’s debt-to-GSDP ratio is presently around 35% compared to the national average of 25% owing to the CPI’s high commitment to expenditure such as wages to the public sector and social programs.
The impact of deindustrialisation on the paradox
The negative aspects of Kerala's economic situation today are largely attributed to the state’s lack of industry. The state has undergone a significant increase in the tertiary sector (accounting for 33% (1960-61) to 63.3% (2019-20) of its GSDP) yet this has been at the expense of its primary sector (which has seen a vast drop from 52% (1960-61) to 8.4% (2019-20) of its GSDP) and the growth of its secondary sector. The profound level of deindustrialisation that Kerala has undergone has certainly proved to be beneficial to much of society (e.g. in helping to increase GSDP per Capita) yet it has led to a long-term fall in employment opportunities and a rise in militant trade unionism which has hampered major investments resulting in economic stagnation.
The beating heart of the paradox
Kerala’s economy has become shockingly reliant on NRI (non-resident of India) deposits and remittances which now form an astonishing 23.2% of Kerala’s net state domestic product. As the Policy Circle puts it, “rather than relying on tangible goods production, Kerala has specialised in exporting human capital”. Such a unique situation highlights the bizarre nature of Kerala’s socio-economic paradox whereby the monetary inflow from abroad has profoundly raised GSDP per capita, fulfilled much of the state’s societal goals (e.g. low poverty levels) and thereby enriched the population all the while depriving the government of substantial tax revenue which has amounted significantly to its current fiscal distress.
Nevertheless and albeit in a peculiar fashion, these high remittance inflows demonstrate the success of Kerala’s education system (e.g. attaining a 96.2% literacy rate compared to India’s 77.5%) and thereby the success of the “Kerala Model” as Keralites are able to use their skills for higher paying jobs in other Indian states and nations like the UAE and successfully remit much of their earnings back to Kerala.
The Kerala Model’s national and international significance:
While indeed many aspects of the state’s socio-economic situation are almost entirely unique to Kerala, it must be noted that an unparalleled proportion of the state’s success is rooted in the profound level of social cohesion that exists uniquely in Kerala. This is demonstrated by the state’s community operated care system which is funded through local microdonations that can be as low as 10RS/21cents. Despite the state accounting for a mere 3% of the nation’s population, Kerala’s care system has become so successful that they are able to offer two-thirds of India’s palliative care. Kerala’s societal cohesion is largely attributed to the state’s decentralisation which has resulted in a remarkable level of individual participation in local governments, such as allowing for greater autonomy in decision making and state planning (that has catalysed the reduction of poverty levels) and the state’s noteworthy gender equality policies which have resulted in greater familial cohesion which has likely contributed to the state’s high remittance levels.
It is this model of socio-economic success from societal unity that has given the obscure state of Kerala profound significance on the national stage (as seen in the recent implementation of Kerala's schooling system in the state of Jammu & Kashmir) as a socio-economic system worthy of replication in other governing bodies.
The views and opinions expressed in this article belong solely to the writer and do not necessarily reflect the views and opinions of the Warwick Economics Summit.
References:
The New Indian Express:
The Indian Express:
NDTV:
Government of Kerala:
Finance Commission of India:
Policy Circle:
The Economic times:
Comments