The Hindu Business Line : Policy initiatives must link human development with growth: Report

POLICY GUIDELINES
Concerted efforts needed to improve and develop vital infrastructure such as supply of electric power, water control, road and water transport.
An area requiring immediate attention is environmental sanitation.
The report calls for a mission mode approach with a time-bound plan for promoting `sustainable tourism'.

Thiruvananthapuram , March 31

Kerala, which is ranked first among the States in the country in human development index, is in need of several policy initiatives to link this advantage with economic growth.

While the progress on the income front may have been retarded in relation to non-income achievements in the earlier phase of the State's development, the initial investment in human development has contributed greatly to the spurt in growth in the subsequent years, according to the latest Human Development Report prepared by the Centre for Development Studies.

MIGRATION

The growth process in the post-1980s period has been significantly helped by the State's distinctive profile of demographic development and superior educational attainment. These in turn have been instrumental in encouraging migration, leading to remittances from abroad.

The emergence of the economic growth linked with human development, however, calls for policy initiatives to further strengthen the process, says the report.

The most critical aspect, both from the short-term and long-term points of view, is the management and development of critical infrastructure. This requires concerted efforts to improve and develop vital infrastructure such as supply of electric power, water control, road and water transport and environmental sanitation.

A common factor in the development of critical infrastructure is the time and cost overruns and this has been especially so in the case of irrigation and power sectors. A thorough review of the situation in respect of all infrastructure projects is necessary with a view to eliminating such overruns for future projects.

ENVIRONMENT

Another area requiring immediate attention is environmental sanitation. While local bodies are charged with the responsibility of environmental sanitation, they are not provided with adequate support in terms of resources, technical assistance and political will.

Tourism industry has emerged as one with high potential for the development of the State. However, past experiences in promoting tourism have not been conducive to enhancing human development, resulting in a negative impact on society, economy and environment.

In the circumstances, the report has called for a mission mode approach with a time-bound plan for promoting "sustainable tourism". A system should be put in place for improving the material and non-material well-being of communities through the involvement of local resources in tourism development.

It has been pointed out that a sizable proportion of the expenditure incurred for basic human development in Kerala is borne by the State Government. Given the public and "collective good" nature of most of these expenditure, government budget will continue to be the main source for the purpose.

POLITICAL LINKAGES

However, higher public expenditure will be necessary in such critical infrastructure areas as power, drinking water and sanitation in order to strengthen political linkages between human development and economic growth.

All these point to the crucial role of public revenue. But as in the case of most states in India, the fiscal situation in Kerala is characterised by continuing deficits and this calls for concerted measures to correct the situation.

In this context, the report has proposed, among other things, the strengthening of the revenue (both tax and non-tax) collection machinery at the State-level through a package of incentives and disincentives, estimating the potential revenue through detailed studies and plugging the loopholes for evasion.

Also, the tax base should be widened to include the services sector, which has emerged as the leading sector in the State's economy. This would require consultations with other states as well as the Union Government since the states do not have the power to tax services, according to the report.