Kerala should be worried if KIIFB is shelved, says Thomas Isaac

Points out Congress’ NYAY requires Rs 2 lakh crore for five years — a burden the state can’t afford to take, asserts KIIFB can transform state’s economic gains

Published: 29th March 2021 04:19 AM  |   Last Updated: 29th March 2021 04:19 AM   |  A+A-

Finance Minister TM Thomas Isaac.

Finance Minister TM Thomas Isaac,

Express News Service

KOCHI: Finance Minister TM Thomas Isaac, who is not contesting in this election, is confident of the LDF returning to power. In an interview to The New Indian Express, the 68-year-old Communist leader outlined his vision for the ‘New Kerala’ model, funding of government’s ambitious welfare programmes, Congress’ NYAY and his plans. 

The LDF manifesto promises further expansion of welfare schemes, including pension hike. How would you fund them? 

If you look at the history, you will find Kerala governments have been behaving, by and large, responsibly. And it is different from what many people think is happening in Kerala. Now, many are saying that you are giving welfare pension, but why should you increase it to Rs 2,500? Can a state afford it? Why would you give houses to everybody at Rs 4 lakh/unit? How are you going to invest so much and still pay doctors, medical staff and teachers? Due to this expenditure, Kerala’s revenue deficit will never be zero. I consider my spending on education and healthcare as capital expenditure – in human capital. My argument is, and this is my key argument, a historic compromise within Kerala must work out a new development paradigm for the state. 

Can you elaborate?

Kerala’s social structure has changed. It is no longer a polarising society. It is one bulging in the middle – the great Kerala middle class, people who have benefited from migration, education and commercial crops in its good days and also increase in land prices. I think it comprises nearly 30 per cent of Kerala society. Then there are 30 per cent who are very poor and another 40 per cent who aspire to become the first 30 per cent. This is the Kerala structure. These aspirations of the middle class are for better education and healthcare and quality jobs, which require a change in the state’s economic base. Kerala has to move from being a low-productive economy to become a highly productive economy. For this, it’s important that Kerala shifts to knowledge industries, skill-based economies, service-based industries and value-added agri-processing industries. Unless this happens, you cannot sustain this model to meet the aspirations of this new middle class. The old equilibrium is gone. It cannot survive on redistribution alone. 

How would you do that? 

That’s where KIIFB comes in. Since I was spending on revenue expenditure, the budget lacked surplus money to invest in infrastructure. This can be done in two ways. One, allow private capital. However, they would want a much higher return, which means a very high user fee. That is unacceptable. Hence, we designed a financial institution that uses various financial instruments fashioned in the last two decades to let firms mobilise money from the market. In KIIFB, we have an institution that has the credibility and capability of doing this. And it is raising Rs 50,000-60,000 crore that will be invested in infrastructure, which will meet the aspirations of the middle class.

How will you link this investment in infrastructure to the welfare of the poor?

That’s what I call ‘the class compromise’. Physical assets meet the aspirations of the middle class to a great extent and future generations of the poor who are educated. But what about those in the bottom 30 per cent? We are telling them that we will give total social security. We will guarantee them the best education and healthcare for the next generation. So, we will spend on it as a social compromise is required between the middle class and the basic classes of Kerala. The poor are guaranteed social security. Through this, we are establishing the unity of the majority of people in Kerala, in support of a drastic change in the development paradigm. 

How will the infrastructure generate money for you?

This infrastructure will make Kerala an attractive investment destination. We are now taking two more steps to transform our economic base. First, we will take advantage of the globally emerging gig economy. Before Covid, an estimated 15 lakh people worked from home across the world. Post Covid, it increased to three crore and is expected to touch 18 crore in five years. If we can attract 20-25 lakh people of this segment to Kerala, our economy will transform to a much higher level. Second, Kerala has one of the lowest women participation rates in labour market. A huge women labour force is sitting at home as housewives, while the uneducated do jobs requiring manual labour. This is the paradox of the Kerala development model. Twenty lakh people getting employed in five years with an average income of Rs 20,000-30,000/month is a huge addition to the income. It can be done only now, as K-Fon, our internet superhighway, is getting realised just now. We are going to provide free internet to every poor citizen of Kerala. With this, work from home will become feasible. 

What are the LDF’s chances in this election? 

There’s absolutely no doubt that LDF will win and that too with a comfortable margin. There is not a single pre-poll survey which shows we are not winning.

If, by any chance, the Opposition comes to power, are you worried some of your pet schemes like KIIFB will be shelved?

Kerala should be worried, not me. They said they are going to ‘udachuvarkkum’ (break it and concrete) KIIFB. I told them before you break it up or ‘udakkan’, you better tell us how you are going to concrete it. They are reckless. They don’t understand what KIIFB is and it is a major concern. KIIFB is a one-time chance for Kerala to effect a change in its development paradigm. The continuity of the government will ensure that. Kerala’s economic gains will be transformed and it will be a new Kerala.

The Congress manifesto has promised to implement NYAY. Have you studied it? 

Going by what they have said in their manifesto, it would require Rs 2 lakh crore to implement the scheme in Kerala for the next five years. That will be a disaster. We can’t afford to take such a huge financial burden. There’s simply no money to execute a programme of that size in Kerala.

Where does Thomas Isaac go from here?

I am a part of the CPM leadership. I’ll be active in politics. The party will decide in what way I will collaborate with the government. For me, whether I’m a minister or not, most of my time will be spent collaborating with innovative projects and programmes throughout Kerala. Of course, I’ll get more time to read and write.


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