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Economic Review sees signs of relief in rural distress

Special Correspondent

State growth during 2006-07 pegged at 8.1 per cent


Farmer suicides came to an end in State by mid-2007

Revival of ‘serious planning’ in the countryside


THIRUVANANTHAPURAM: The Gross Domestic Product (GDP) of the State in real terms grew by 8.1 per cent in 2006-07, which is marginally higher than the 8 per cent growth recorded in the previous year, according to the Economic Review 2007 prepared by the State Planning Board.

Though good growth rates for most of the other States have of late been accompanied by increasing distress for significant segments of the population, in Kerala it came together with reduced rural distress during 2007. The most significant reflection of this was that peasant suicides came to an end in the State in the second half of 2007, said the review, which was circulated to the MLAs and the media on Tuesday.

The review attributed this to the setting up of a statutory Debt Relief Commission by the State government, which brought “substantial hope to the distressed peasantry with its very formation.” The review adds that the revival of the world market prices of a variety of cash crops too had helped, although the revival was already under threat because of the rupee’s appreciation vis-À-vis the dollar and the imminence of a slowdown in the world economy.

“Debt relief, together with the provision of an assured remunerative price of Rs.9 per kilogram for paddy and the scrupulous implementation of the National Rural Employment Guarantee scheme in the poorest districts of the State, has brought some amelioration in rural distress in Kerala,” the review said.

At constant (1999-2000) prices, the primary sector recorded a growth of 6 per cent, the secondary sector 8.3 per cent, tertiary sector 8.7 per cent in 2006-07.

The review said that there had been a revival of “serious planning” and of Plan expenditure in the countryside. A stagnant tax-GDP ratio and the strict adherence to the Fiscal Responsibility Act [by the previous government] had drastically curtailed Plan expenditure for four years till 2005-06. A shift in approach, resumed at a modest level, is gathering momentum in the State, the review said.

The review warned that inflationary trends, caused by national and international factors, could affect the State in the years to follow immediately. The looming world recession could bring down the terms of trade for primary produces [cash crops in Kerala] vis-À-vis the manufacturers. At the same time, the breakdown in the public distribution system would make things difficult for Kerala, the review said.

“This is a situation for which we have to be prepared. Putting pressure on the Centre for adequate supplies of foodgrains and keeping the public distribution system going must constitute one part of our effort; reviving Kerala’s food economy so that a modicum of food security is provided to the State must constitute the other part,” the review said.

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