The report in The Times of India, “Cash-strapped state govt knocks at Center’s doors” (Mar. 24, 2016), describes the logical result of the Kerala government engaging in publicity-seeking gimmicks [2, 3] and outright scams [2, 3, 4].
With almost no effort being directed towards productive activities in the economy, getting loans have become necessary source of revenue for Kerala government — from Japan, France, Germany, ADB, Central government [2, 3, 4, 5] and anybody else  willing to offer loans.
“To meet monthly expenditures, the state government had opted for raising money through the auction of 10-year state development loans (SDLs.) During January-March, 2016, the government had raised Rs 3,500 crore by auctioning securities.”
It seems Kerala government does not even know the distinction between “development” investment and monthly expenditures. Clearly, using development loans for monthly expenses is deception or illegal. Kerala economy seems to have reached “regulatory capture” [2, 3] by Kerala government.
Things can improve, but first Kerala government needs to change its misguided approach.
- Give full autonomy to all Kerala government agencies. Currently, the government occupies a disproportionate share of economic activities and creates “decision bottlenecks.”
- Transform the education system to develop a skilled workforce to operate the Kerala economy, so that full economic potential of Kerala can be achieved.
- Implement “performance monitoring dashboards” in all government departments, agencies and companies.
One of the current problems is many, if not all, Kerala government departments, agencies and companies are operating without proper financial controls. Performance dashboards, similar to the dashboard in a car, will help monitor revenue, expenses, goals, warnings, impending problems, etc. so that corrective actions can be taken before things turning into crisis.
Kerala economy ($59B, 2014-15) is like a boat without a compass, and Kerala government regularly conjures up ideas which way to go without meaningful goals. With functioning performance dashboards, programs can implemented to revive Kerala economy effectively.
- Wealth-generating economic activities – not finance – is the answer
- Economic development assistance is debt trap
- A breakthrough strategy
- Think big for overall development
- A failed local government?