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Debating Decentralized Development: A Reconsideration of the Wenzhou and Kerala Models
Unformatted Document Text:  25 other states, the “crisis” includes the following components: increased dependence on rice imports; relative decline in traditional industries such as cashews and handlooms due to competition from external sources of cheaper labor; stagnant industrial growth; unemployment three times the national average; a series of fiscal crises resulting in the highest deficit levels of all Indian states (see Table 2); 57 and a rise in environmental problems, including deforestation, soil erosion, water and air pollution, and over fishing. 58 The sense that Kerala’s high levels of human development can no longer be sustained without comparable levels of material development has been reinforced by the rise of the neo-liberal Washington Consensus in developmental discourse and practice since the mid-1980s. That is, the fact that the main international financial institutions, the World Bank and the IMF, have been advocating structural adjustment in the form of fiscal tightening and government downsizing, and the fact that India accepted structural adjustment loans in 1991, has rendered the economic shortcomings of the Kerala model all the more salient, if not objectionable. Table 2. Kerala’s State Budget, Revenue Account, 1980-2002 (Rs in Crores; 1 crore = 10 million Rs) Year Revenue Receipts Revenue Expenditure Revenue Deficit (-)/as % of GDP Fiscal Deficit (-)/as % of GDP Total Debt/as % of GDP 1980-81 640 368 -28 1990-91 2403 2825 -422 1996-97 6145 6788 -643/1.45% -1303/3.36% 11421/25.69% 1997-98 7124 8241 -1117/2.27% -1542/3.47% 12868/26% 1998-99 7201 9228 -2027/3.61% -2414/4.88% 15700/27.91% 1999-00 7944 11566 -3622/5.79% -3012/5.35% 20176/32.27% 2000-01 8731 11878 -31474.56% -4533/7.25% 23919/34.64% 2001-02 9056 11662 -2606/3.42% -3878/5.62% 26951/35.38% 57 Government of Kerala, “The Budget Speech 2003-2004: The Fiscal Position,” available on-line at http://www.kerala.gov.in/budjet2003-04/a_fiscal.pdf . 58 John Kurien, “Ruining the Commons and the Responses of the Commoners: Coastal Overfishing and Fisherman’s Actions in Kerala State, India,” Discussion Paper No. 23 (Geneva: United Nations Research Institute for Social Development,” 1991.

Authors: Tsai, Kellee.
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25
other states, the “crisis” includes the following components: increased dependence on rice
imports; relative decline in traditional industries such as cashews and handlooms due to
competition from external sources of cheaper labor; stagnant industrial growth; unemployment
three times the national average; a series of fiscal crises resulting in the highest deficit levels of
all Indian states (see Table 2);
57
and a rise in environmental problems, including deforestation,
soil erosion, water and air pollution, and over fishing.
58
The sense that Kerala’s high levels of
human development can no longer be sustained without comparable levels of material
development has been reinforced by the rise of the neo-liberal Washington Consensus in
developmental discourse and practice since the mid-1980s. That is, the fact that the main
international financial institutions, the World Bank and the IMF, have been advocating structural
adjustment in the form of fiscal tightening and government downsizing, and the fact that India
accepted structural adjustment loans in 1991, has rendered the economic shortcomings of the
Kerala model all the more salient, if not objectionable.
Table 2. Kerala’s State Budget, Revenue Account, 1980-2002
(Rs in Crores; 1 crore = 10 million Rs)
Year
Revenue
Receipts
Revenue
Expenditure
Revenue
Deficit (-)/as %
of GDP
Fiscal Deficit
(-)/as % of GDP
Total Debt/as %
of GDP
1980-81 640
368
-28
1990-91 2403
2825
-422
1996-97 6145
6788 -643/1.45% -1303/3.36% 11421/25.69%
1997-98 7124
8241 -1117/2.27% -1542/3.47% 12868/26%
1998-99 7201
9228 -2027/3.61% -2414/4.88% 15700/27.91%
1999-00 7944 11566 -3622/5.79% -3012/5.35% 20176/32.27%
2000-01 8731 11878 -31474.56% -4533/7.25% 23919/34.64%
2001-02 9056 11662 -2606/3.42% -3878/5.62% 26951/35.38%
57
Government of Kerala, “The Budget Speech 2003-2004: The Fiscal Position,” available on-line at
http://www.kerala.gov.in/budjet2003-04/a_fiscal.pdf
.
58
John Kurien, “Ruining the Commons and the Responses of the Commoners: Coastal Overfishing and Fisherman’s
Actions in Kerala State, India,” Discussion Paper No. 23 (Geneva: United Nations Research Institute for Social
Development,” 1991.


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