The interface of economics and politics is a fascinating topic and in democracies, at what stage economics overtakes politics can perhaps be only derivatively understood based on electoral outcomes post-facto. The Assembly elections in Kerala which concluded in the first week of this month could well be a case in point.

This coming Sunday when the votes are counted, it is anybody’s guess which coalition will win though most of the pre-poll surveys have indicated a majority for the ruling Left Democratic Front (LDF) led by the CPI (M).

If that happens, it would be a striking departure from the Keralites’ practice of voting in the two fronts by turns to power.

But what is undeniable is that despite a weak financial structure, as is the bane of most States, Kerala’s finance management has been adroit and the State government has managed to spend its way through a tough time — two floods, a cyclone and now Covid. And it is State’s Finance Minister Thomas Isaac, who has been singularly responsible for ensuring that money is available to fund the LDF’s various initiatives. The personally affable but politically pugnacious developmental economist has succeeded where most others would have floundered.

Isaac’s role in the State’s economic path is marked by at least three major moves. First and foremost is in fact the last of the three major strategic initiatives that he made.

Upon assumption of office, he reactivated the KIIFB. As a strategy for resource mobilisation it was a brilliant move, which very few other States had tried.

In mission mode, he on-boarded a retired civil servant of impeccable credentials, KM Abraham to spearhead KIIFB and ensured that money is available for infrastructure development especially in government schools and hospitals, something which people across the State have experienced.

Banks lent money. It raised resources from the market as well. Almost each of the 14 districts in Kerala and 140 Assembly segments have “felt” the impress of KIIFB funds within its boundaries.

At last count, KIIFB had spent about ₹7,500-8,000 crore for infra development, the pace picking up as the LDF government was nearing the end of its term. Backed by good advertisement spend and a few sponsored programmes on TV, KIIFB has become identified in the public mind with shiny premises for schools, upgradation of State government hospitals and roads.

One is aware of the controversies surrounding KIIFB. The entity has been facing scrutiny by Central agencies and this is not the time to sit in judgement over its shortcomings or failures or worse. Let the examination/scrutiny run its course and then constructive lessons can be learnt to make for corrections.

Second is Isaac’s strong voicing of the State’s requirement at federal forums including the GST Council. The compensation to States, for GST-related shortfalls which was agreed upon ultimately for the passage of the GST Bill was on account of the strong pitch made by Isaac along with other State Finance Ministers like Haseeb Drabu and Amit Mitra. This ensured flow of resources for Kerala when Covid struck.

It has to be noted that the Modi government and the Finance Ministry also played extremely fair in allocating resources to all States, by accepting demands for additional borrowings of 2 per cent of State Domestic Product during Covid-19 and even a hike in the Ways and Means limit by 46 per cent as per the advices of an RBI panel which continues to this day.

There is criticism now that Kerala is resultantly over leveraged. But that holds true for governments in general in these pandemic times. Such “fundamentalist” views on fiscal prudence do not hold water at least at the present juncture.

Women to the fore

The third palpable fallout of Isaac’s economics which may have a bearing on the May 2 results hark back to his tenure at the State Planning Board in the late 1990s when he piloted People’s Planning at the grassroots and pitched hard for the Kudumbashree movement. It has grown to become one of the largest women’s collectives in India bringing about meaningful programmes for livelihood through micro-credit from banks in Kerala.

There are about 30 lakh women who are members of the Kudumbashree movement. (Politically, they are financial agents of 30 lakh families, who mostly go out and vote.) This is economic mobilisation of women with a political fallout, at its best.

All of them have seen how money in their hands can be a potent tool for economic and social empowerment. Add to this the State’s liberal welfarism funded by a large purse, courtesy the State’s FM and a successful packaging of even a few Central assistance schemes at the last mile as largesse from the local Establishment and you will find economics becoming politics at Ground Zero.

The results on May 2 could well be a measure of how much such economics has trumped politics in a State where the vote shares of the two fronts are evenly matched and the BJP is a loner with a large State-wide following.

The writer is a top bank executive. Views are personal.