The complexities of COVID-19 still remain elusive, yet it appears that Kerala, known for its high social development, has done well with its anti-corona measures. The state is aware that even if the country recovers from the pandemic, its economic and social impact is only going to exacerbate over the coming months. Kerala is also the first state to recognise that COVID-19 is not just an epidemiological crisis -- it is a crisis of ‘moral economy’ as well.
The Left Front government is keen on revitalizing the state’s moral economy through intensified reciprocal arrangements between its populace and the state.The critical marker of the ‘moral economy’ evolved in the time of Corona is that of a combination of moral and legal obligation with mutual complementarities. Its consensual and enforceable manner has taken the form of appropriate economic packages, even reaching out to lakhs of migrant labour force. Supplementing the relief measures of the Centre such as Garib Kalyan, Kerala has heralded and scaled up its activities.
An economic package worth Rs 20,000 crore that essentially aims at providing immediate subsistence to the poor and vulnerable social sections has been announced. Kerala has its own strategy of financing the economic packages: the strategy of front-loading the welfare expenditure, simultaneously planning to fill up productive sectors with capital expenditures over time. Given the fact that FRBM may not allow the state to borrow the maximum potential upfront in 2020-21, the RBI has already allowed the state to raise Rs 6,000 crore to begin with. It is expected that the Centre would also make FRBM rules more flexible allowing states to exercise more autonomy to address financial challenges.
Even though the Centre’s Rs 1.7 lakh crore Garib Kalyan package has commendable schemes, some of its components put even the Centre itself way over its head. It has miserably failed to provide the migrant workforce with either food or free rations, that also at a time when the Indian food grain stock is almost four times the buffer norms – more than 77.7 million tonnes as against the norm of 21.4 million tonnes. In contrast, the Kerala model assures free food and provisions to its guest workers, despite being a food deficit state.
Kerala is moving ahead with a unique social contract into which the ‘state-society moral economy’ is entwined. However, the challenges to a state like Kerala with its narrow range of revenue sources on the one hand and the committed high expenditure on the other remain sources of concern. Major sources of funds for the state such as lottery, liquor and motor vehicles have dried up during lockdown. The situation would become worse if the state is forced to repay its loans shortly. Creating new sources of internal resources inevitably requires carving out a new policy of redistributive state by reinforcing its moral economy and deepening democracy, which in fact is the most challenging task.
Two directions appear to be important for the state to gain such a long-term goal. Firstly, the state can no longer be complacent with its liberal attitude to the locked-up funds in the state. It cannot be blind to encrypted sources of funds. The state will have to go for critical policy measures in mobilising resources by targeting not only the revenue but also by adopting creative rationalisation of taxes on wealth with respect to high income groups. Secondly, as the state has already been keen on offering the poor a multiplicity of windows in terms of kind and cash, a reformulated policy turn towards a Universal Basic Income (UBI) would be easier to implement.
(The author is member of the Kerala State Planning Board. He was formerly a visiting fellow at Oxford, Manchester and Cambridge varsities. His views are personal)