Cracking the Kerala Myth: Image as a state-led success crumbles in the face of hard facts : The Economic Times

That Kerala has the best indicators of health and education outcomes among all Indian states and enjoys a low rate of poverty is beyond question. The state unequivocally enjoys the highest male and female literacy rates and life expectancy at birth, and the lowest rates of infant mortality, maternal mortality and malnutrition. Because the communist and other left-of-centre governments have ruled Kerala for the better part of its post-Independence history, analysts routinely attribute its superior achievements in health and education to the high priority these governments have allegedly assigned to equity and related social goals over time. This view has gained so much currency that, while its advocates feel little obligation to offer supporting evidence, detractors remain ill at ease to insist upon it. Yet, like all conventional wisdom, this too must be subjected to careful empirical scrutiny and, if need be, challenged. Begin with equity. Going by the latest available calculations from the expenditure survey conducted by the National Sample Survey Organisation (NSSO), Kerala had the highest rural and urban inequality among the largest 15 (by population ) Indian states in 2004-05. The state has shown consistently high, if not the highest, levels of inequality since NSSO began conducting large-scale "thick" expenditure surveys in 1973-74. High inequality means that, contrary to claims by many, Kerala could not have achieved the decline in poverty without significant increases in income. Indeed, data on incomes and expenditures support this inference. An ongoing joint study of the 15 largest states by Columbia University and the National Institute of Public Finance and Policy shows that since 1980-81, the earliest year from which systematic gross state domestic product (GSDP) data are available, Kerala consistently ranks among the top five states by per capita GSDP. Indeed, in the latest 2009-10 thick NSSO expenditure survey, Kerala tops the list of states ranked by per capita expenditures in both rural and urban areas. Given Punjab and Haryana had enjoyed higher per capita expenditures than Kerala in 1983, this fact points to faster growth in per capita expenditures in the latter than the former. Poverty levels in urban and rural Kerala have, thus, fallen not because its left-of-centre governments promoted equity but because per capita expenditures rose rapidly, thanks in large part to inflows of remittances. But what about education and health? In a nutshell, Kerala enjoys the highest indicators in these areas because it started at the highest level at Independence. In 1951, it had a literacy rate of 47% compared with 18% for India as a whole and 28% for Maharashtra, the closest rival among the large states. By 2011, these rates had risen to 94, 74 and 83%, respectively. The gains made, thus, equal 47, 56 and 55 percentage points for Kerala, India and Maharashtra, respectively. Even Bihar, the poorest state in India, made a gain of 50 percentage points over the six decades, beating Kerala!

The story is no different in health. Take just two indicators for which i am able to obtain data going back to the 1970s: life expectancy at birth and infant mortality per 1,000 live births. Life expectancy during 1970-75 was 62 in Kerala, 50 in India and 54 in Maharashtra. By 2002-06, the three entities had added 12, 14 and 13 years, respectively, to these life expectancies. Among the large states, Tamil Nadu and UP made the most impressive gains: 17 years each. In a similar vein, whereas Kerala lowered its infant mortality rate by 46 deaths per 1,000 live births between 1971 and 2009, Gujarat achieved a reduction of 96, Tamil Nadu of 85 and Maharashtra of 74. Can we find compelling evidence of successful public sector interventions in education and health as the source of sustained high levels of education and health in Kerala? The answer to even this question is in the negative. Consider health first. True, setting aside the small state of Goa, whose public expenditures on health are consistently three to four times those of Kerala, the latter has ranked first or second in per capita public expenditures on health since 1991-92. But this observation masks two facts. One, these expenditures have hovered around a bare 1% of GSDP. Two, and much more importantly, private expenditures on health dwarf public expenditures in Kerala: in 2004-05, the latest year for which we have data, whereas public expenditures amounted to just 0.9% of GSDP, private expenditures were a gigantic 8.2%. The corresponding India wide figures were 0.9 and 3.6% of GDP, respectively. The proportion of the population accessing public health services reinforces this story. In 2004, only one-third of rural and one-fifth of urban population chose the public health system for nonhospitalised treatment. Likewise, only about one-third of the population in both rural and urban areas chose public facilities for hospitalised treatment. This same pattern is observed in education. NGO Pratham carries out extensive surveys of children in school up to 16 years of age in rural India. According to its latest report ASER 2010, excluding two or three tiny northeastern states, at 53% Kerala has the highest proportion of students between ages 7 and 16 in private schools in rural India. The corresponding figure for the nearest rival, Haryana, is barely 40%. No matter how we look at it, the conventional and dominant story of Kerala as a state-led success crumbles in the face of hard facts.

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Best regards, Sanjeev

While some may view the food security Bill as the instrument of combating poverty, this distinction belongs to the National Rural Employment Guarantee Scheme, the flagship anti-poverty programme of the United Progressive Alliance government. The proponents of the food security Bill at the National Advisory Council have promoted it as the instrument of fighting widespread and rising hunger, instead. But what is the empirical basis of the claims of widespread and rising hunger in India? Surely, we cannot go bythe claims of the Food and Agricultural Organization, World Bank and many NGOs who themselves prosper from propagating the view that India and Africa suffer from ever-rising hunger and poverty. It so happens that successive expenditure surveys of the National Sample Survey Organisation (NSSO) have asked Indian households whether they have had enough to eat throughout the year. The proportion of those replying in the negative was a high 19% in rural and 7% in urban areas in 1983. But the proportion has steadily shrunken, dropping to less than 3% in rural and less than 1% in urban areas in 2004-05. In what sense then does India suffer from widespread and rising hunger? In their support, the proponents of the food security Bill point to the decline in calorie and protein consumption intake and rise in fat consumption over the years. According to the NSSO, the per-capita calorie consumption across all individuals fell from 2,266 to 2,047 between 1972-73 and 2004-05 in rural India, and from 2,107 to 2,020 in urban India over the same period. Asimilar trend has been observed in protein intake while the reverse trend has obtained in fat intake. This decline in calorie consumption is, however, reconciled with the sharp decline in the proportion of individuals reporting lack of food once we recognise that economic development has reduced the need for calorie consumption. Thus, increased mechanisation in agriculture and construction improved means of transportation and the shift away from physically-challenging jobs has reduced physical activity. Simultaneously, better absorption of food following improved epidemiological environment means that less calories must be consumed toproduce a given amount ofenergy. Improvements in adult height and all other vital health indicators such as life expectancy, infant mortality and child nutrition reinforce this argument. Even so, let us be generous to the proponents for a moment and accept that hunger, as they wish to measure it, has risen and is widespread. The million-dollar question then is whether the food security Bill will provide the necessary correction. A moment's reflection shows that the answer is an unequivocal no. The Bill entitles the poor to 7kg of grain per person per month at prices of 1, 2 and 3 per kg for coarse grain, wheat and rice, respectively. So, if I were someone living in abject poverty in Rajasthan, what will be my response? Each month, I will claim 35 kg of rice from the ration shop for five members of my family at the total cost

of 105. I will then sell this rice at 25 per kg for 875 in the open market, buy the usual 25 kg of coarse grain my family consumes in the open market for 250 (at 10 per kg) and net the handsome profit of 520. I would then use the profit to send a child to the neighbourhood private school and perhaps buy myself a little extra liquor to celebrate! While the proponents of the Bill may harbour the illusion that the poor will consume what they buy at the ration shop, you can count on the poor themselves being a lot savvier: they will demand at the ration shop their entire entitlement in rice (since it carries the maximum subsidy) and then convert it into whatever consumption basket they desire in the open market. Therefore, if the government is serious about offering the poor the grain of their choosing as in the Bill, even assuming zero leakage, it better be prepared to procure 41 million tonnes of rice per year to fulfil its promise to 490 million individuals in 'priority' households alone. There is clearly a mismatch here between the objective of pushing calorie consumption and the instrument chosen. Given that calorie consumption has declined at all income levels in the face of steadily rising incomes, lack of affordability is not behind the decline. Besides, the decline has taken place in the presence of an extensive public distribution system. To-date, the groups pushing the food security Bill on the basis of reduced calorie consumption have not explained why the food subsidy in this Bill will reverse the process while exactly the opposite has been the case under the existing public distribution subsidy. The fact of the matter is that subsidised grain, which can be readily converted into cash in the open market, will do precious little to alter the consumption pattern of the beneficiaries. Add to this the possibility that the real nutrition problem for many may be low protein and high fat intake rather than low calorie consumption. Therefore, while food subsidy may make us feel good, it is scarcely the answer to the problem at hand. The government needs to separate the objectives of transferring purchasing power and persuading people toopt for the right consumption basket. The latter requires nudging the public toward a more nourishing diet and, more importantly, getting wholesalers and retailers to fortify various foods with nutrients in ways that people find appealing.