People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 5

February 15, 2009


Kerala CM: A Comprehensive Scheme Needed To Protect Traditional Sectors

The following is the text of the speech of V S Achuthanandan, chief minister of Kerala that was made during the discussion on the finalisation of the annual plan 2009-2010

WE are in the midst of a severe world recession. Of all the states in India, Kerala will perhaps be the worst affected by it for a number of reasons. First, the state is heavily dependent upon the exports of primary commodities like coir, coffee, pepper, rubber and spices, whose prices have started falling because of a contraction in world demand. Even for traditional products whose destination is not the world market but the national market, the decline in world prices, with which domestic prices are now linked, will still hurt our producers. Secondly, the state has a substantial annual remittance inflow from Keralite workers employed in the Gulf region, and with the reduced oil prices on account of the world recession, these remittances are likely to decline. Thirdly, the state has a substantial service sector comprising tourism, healthcare services, and IT which has an international clientele. They too are bound to feel the impact of the crisis.

We need a large annual plan for 2009-10 to counter these adverse developments. Unfortunately, however, we have been constrained to fix the proposed annual plan size for 2009-10 only at Rs 8650 crores, representing mere 12 per cent increase over the current year’s outlay of Rs 7700 crores. Within this rather meagre outlay we have tried to provide succour to the crisis-hit traditional sectors, but the scale is inadequate.

The reason lies in the strict borrowing limits being enforced upon the states. The rise in the states’ borrowing limit by Rs 30,000 crores which has been announced recently refers only to 2008-09; and it covers only the revenue shortfall caused by the recession. Even if a similar increase in borrowing limit is allowed for 2009-10, that can at best leave the plan outlay unchanged at Rs 8650crores; it would not permit a rise in the outlay which is essential. The union government must distinguish between “borrowing to offset revenue loss” and “borrowing to provide an additional stimulus” in a recession. It has till now only recognised the need for the former, the Planning Commission must impress upon it, the need for the latter as well.

The stimulus packages announced by the union government till now offer no help to the peasantry and the petty producers of the traditional sector. A comprehensive scheme needs to be drawn up for protecting these sectors against recession. The “safety net” provided by the NREGS is not enough, since the NREGS can scarcely help these producers. Their problem is not that they get employment for a small number of labour days, but that the return per labour day is meagre for them and shrinking owing to the recession. The NREGS which may work in the first case does not work in the second.

Here, I should make a special mention about the Indian workers toiling abroad for earning valuable foreign exchange for the country. As a nation, which benefited the most from ‘workers remittances’, we owe them a lot. They also eminently deserve to be protected with a “safety net.”

I would suggest that while making stimulus package beneficial for peasants, petty producers and migrant workers, the Planning commission must hold detailed consultations with the state governments before formulating them.

The union government was kind enough to consider our request to announce special packages for Kuttanad for Idukki. Unfortunately, these packages are not backed by any sound proposals for financing them, except the suggestion to avail funds under various centrally sponsored programmes. In fact, many problems encountering these regions are not amenable for funding under the existing centrally sponsored programmes. My suggestion in this regard is to give special assistance for Kuttanad and Idukki to the tune of Rs 500 crores. This should be over and above the allocations under all the existing heads.

Let met finally come to the question of one time additional central assistance. In the context of the crisis, we request that the assistance to the state under this head should be substantially increased. In addition to this, Kerala should be given at least Rs 100 crores exclusively for meeting the huge expenditure commitments related to hosting of the National Games. I may also request you to treat this as hundred per cent grant.