Unprecedented floods have caused enormous devastation in the state of Kerala. An initial estimate suggests that the loss is about Rs 35000 crore while the actual loss may be even higher. Chief Minister of Kerala is appealing to all concerned citizens and foreigners to contribute generously to the Chief Ministers relief fund for rebuilding the state. He desires that every Keralite should contribute one month’s salary for this purpose.
While many have contributed their share, there is a strong perception that money may not be utilized efficiently. Whatsapp messages are flooded with people asking ‘unnecessary’ advisors, political appointees etc be shown door and minister’s ‘lavish’ lifestyle, their foreign trips etc be stopped immediately before asking ordinary citizens to sacrifice their one month salary.
While these ‘lavish expenditures’ are inviting public opprobrium, savings on account of curtailing such ‘lavish expenditure’ are insignificant. Apart from voluntary contributions, substantial resources for rebuilding Kerala can, however, also be mobilized by taking up reforms and restructuring some of the ‘untouched’ areas or holy cows. Many of them may be politically hot potatoes, yet apart from a resources point of view, such an overhauling will also be beneficial to Kerala in the long term.
Some such options are given below.
a) Ban on recruitment ( except for necessary services like Police, teachers, doctors etc)-
Kerala has a massive yet inefficient bureaucracy whose number is around 5 lakh (that does not include PSU s, Autonomous institutions and Local-self government bodies, Co-operate sector etc). State government spends around Rs 32000 Cr in a year for their wages alone and Rs 18000 Cr as Pension liabilities. This is against around 1.02 lakh crores of Revenue receipt that this state had last year. Most of these employees are generally unskilled and are employed at clerical levels. In this digital age, it is surprising why the government should have this much number of clerks in its payrolls. However, more surprising is that the government still continue to recruit thousands of Clerks and ‘Assistants’ every year.
The primary job of the Government is to provide its citizen quality Public Goods/Services. It can not provide jobs to a large number of these 'PSC aspirant youths' without inviting fiscal ruin. While nothing much can be done against those already in services, the least that the government should do is to stop any further recruitment. This will save at least a few hundred crores in the coming years.
b) Privatise/ Disinvest State PSU s-
Agreed, this proposal is an ideological ‘No-go’ area for ruling Leftists. However, a crisis is a perfect opportunity for revising ideological positioning and to take up pragmatic policies based on economic reasoning.
We inherited an economy infested with such wasteful use of resources and can be rightly termed as Crony socialism. There are around 140 state PSU s in Kerala, and most of them are in red. All these PSU s together incur a huge drain of public money. Perhaps, the invisible cost to the society may be far higher, even if many are failing to understand its true social costs.
A few of them are profit-making only because of their monopoly rights (like Beverages co-operation). However, if privatized, most of them can fetch a good valuation mainly because they own precious land parcels in key locations. If the Kerala government is sincere on reconstruction and needed funds, the best way to mobilize is through privatization of these ‘assets’. As of today, they are white elephants guzzling a lot of public money and time has now ripened for pulling the plug. If we handover these PSU s to private entrepreneurs, besides earning a good fortune for government, it can also herald a new Industrial revolution in Kerala using these assets.
c) Monetise the land-
Kerala government, through its departments and various other bodies, owns huge land parcels in many cities and most of them are either under-utilized or are simply vacant. A correct figure in this regard is not available to the public, yet the size seems to be substantial. Primary example in this regard is a huge land parcel that Kerala government owns in New Delhi near to Travancore house, which is left vacant because of some strange reason.
This land parcels may be sold to entrepreneurs/ builders/ tourism sector for better and efficient utilization and in the meantime government is ought to get a good amount of money as well. However, our crony socialist ideas taught us to keep these land parcels vacant rather than selling it to private entities at market rates. We often forget that land is just another economic asset which can be bought, sold, leased, mortgaged. It doesn’t have a divinity or sanctity attached to it, nor does such market transaction can be called as parting our ‘family assets’.
d) Increase service charges and user fees-
In Kerala, most of the services offered by the government are either free of cost or are nominally charged. For example, fees for appearing exams conducted by Kerala PSC for government jobs are just 10 Rs whereas the cost for conducting is around Rs 150 per head. Similar is the case with drinking water supply which is almost free and hence inefficiently used. Similar is the case of tolled roads/bridges, parking at public places, various government services etc. Let’s build a new popular culture of payment for quality services.
e) Prune subsidies and increase fees-
Education and healthcare services are heavily subsidized in Kerala. Schools don’t collect any fees from children and in colleges, the fees are ridiculously low. While such low fees are justified in the name of social justice, we really had to rethink whether such free services are to be continued forever and why not an affordable/ reasonable fee be imposed. Let us start with a nominal fee of 100 Rs for a child/ month and ask our college going students to pay Rs 1000 per month as a tuition fee. We should remember that free lunches are not really free and somebody is actually paying for it.
A large section of people in Kerala looks down the private sector and entrepreneurs with an eye of suspicion and think that government is the one to save them from these ‘evil market forces’. Because of our political habits and belief system, we see privatization, service charges, user fees etc as ‘anti-people’ agendas of a neo-liberal state. Such social habits and long-held beliefs are persistent in nature and are hard to change. However, exogenous shocks like a natural calamity, war, the economic crisis can shake up the status-quo and compel them to adopt more liberal, open and competitive economic policies.
It was the Black Death or Plague epidemic in 14 th century that catalyzed the end of feudalism in Europe. Similarly, it was the defeat in First World War that helped Turkey to become a modern secular Nation state. In India, it was a 1991 economic crisis that forced policymakers to undertake, otherwise ‘unpopular’ structural reforms. Similarly, the flood is a perfect opportunity for transforming Kerala into a competitive and well-regulated market economy and to exorcise our crony socialist legacies. Let us not just rebuild our homes and roads, but also revisit our long-held beliefs, assumptions, attitudes, and priorities.
After all, never let a good crisis to go waste. It's an opportunity to do things which we always thought impossible.
