Decades ago, much before other States even began to think about it, Kerala concentrated on taking its economy away from Agriculture to Services. This despite it being one of the three States which had and still has a strong Communist presence - the other two being West Bengal and Tripura. Communists normally had worked for the upliftment of the Agriculture sector. But the Communists (at least those of 50s, 60s and 70s) also emphasised on reading, art films, and philosophical discussions which all required education.
Many things contributed to the transition of Kerala to a Services Economy, wittingly and unwittingly. Kerala has limited land holdings and a high population density. Kerala's population density is thrice as much as any other State of India. And this despite the State being the leader in population control. The land reforms act in 1950s led to fragmented the land holdings and made the feudal lords redundant. The long term consequence was that with very small land holdings, it just did not make economic sense to do agriculture for a living, unless it is a cash crop.
Another reason can be dated back to the pre independence era - 1911 to be precise. The then Travancore-Cochin State took a bold initiative in improving the education and healthcare systems. These intiatives were continued post independence. Hence, by the turn of the century, we had the fourth generation who concentrated on Education and enjoyed better health care. Even when I was studying in 1970s and 80s, when Private School's role was very limited (this has changed since), the State was proud to have a Primary School within walking distance of any child, a Secondary/High School within 5 kilometer of any student and a College within 8 kilometers of any aspirants house. This, along with highly subsidised Bus Travel (we paid just 10 paise to travel upto 8 kilometers till late 1980s, and this subsidised rate was applicable in both Government and Private buses. Even today bus travel for School Children is <25% of the actual rate). The phenominally high circulation enjoyed by the many vernacular newspapers also went a long way in creating awareness.
Initially Kerala took the leadership in preparing its students for the obvious Industrial Economy that should have followed the Agrarian Economy. Many Junior Technical Schools (teaching technical vocational courses equivalent to High School) and Polytechnics (equivalent to +1,+2, +3) were started by the Government. However, the industrial sector in Kerala did not quite take off, because higher awareness and an organized trade union, resulted in higher wages for the workers, forcing many industrialists to move away from Kerala. But the thousands who passed out from the JTS and PTs found job outside the State initially, and later formed the core of the migrant NRI population in the Middle East. Somewhere in the 80s the State and the People becoming aware of the futility of converting the State into an Industrial giant, went one step ahead and wholeheartedly transitioned to the Services Economy. The focus of the education was more on generic programs more suited for the Services Sector, though Technical Education by way of Engineering programs is still the main draw. But most of these Engineers pursue a Management Program and pursue a vocation in the services sector, either in Kerala or more likely outside the State.
The seeds sown by the Travancore- Cochin Government of 1911 on the healthcare front, and the continuation of that policy by the post independence Governments, also saw malayalis pursuing medical education in a big way. This led to the State making tremendous progress in the Doctor:Population Ratio (Kerala's ratio of Doctors to population in the Government Sector is 1:6000, and Doctors to population taking into consideration both Govt. and Private Sector is 1:2000, which is a tremendous achievement). However, more importantly, the advances made by the State in Nursing Education, has created generations of Nurses who, apart from improving the quality of medical care in the State, also brought in much needed Foreign Exchange by migrating to all over the World. In a way, one can say, the State has become dependant on the Services Sector, for both Education and Medical care come under the Pure Services category. It is immaterial whether these practitioners work in Kerala or abroad. That the State leads in controlling infant mortality, pre natal deaths, pregnant woman mortality, overall mortality and higher life expectancy is a side benefit of the above.
Where Kerala has missed out was in exploiting two sectors where it would have done extremely well - IT and Financial Sectors. The IT professionals would have loved Kerala for the cosmopolitan atmosphere, higher wage levels, availability of foreign goods through the numerous duty paid shops, a consumer economy and general levels of education. Similary, Kerala would have done well in the Financial Sector, and should have taken the step to make it a Financial Hub of the nation. Why we didn't think of this seriously or if we did think of it seriously, why we didnt pursue it aggressively is something which both UDF and LDF governments should intrspect. The Vallarpadam container terminal, Smart City Project and the various initiatives on the Toursim front is expected to develop the Services sector further. But if I were the Finance Minister of Kerala, I will go hammer and tongs at converting Kerala into a Financial Hub, and a Banking Destination. This would also help channelise the NRI funds and ensure higher returns for the hardworking NRIs.
