As Kerala CPM embraces markets and private capital, the dilemmas that lie ahead (2025)

This accommodation was itself predicated on other developments like the dissipation of class conflict with the achievement of the goals of the communist movement’s major struggles — for land reforms, labour protection and social security measures. Kerala is not, as is well known, just a topper in human development (Niti Aayog SDG Index) but has transformed from among the poorest regions in the 1970s to one of the richest Indian states. It has the highest Monthly Per Capita Consumption Expenditure in rural areas and the fifth highest in urban areas among major states, and has the lowest multidimensional poverty. This economic transformation has been fueled by human development, migration and remittances, and the service sector. Agriculture —the main area of communist activism — has declined drastically, employing only 26 per cent of the workforce compared to 46 per cent for the whole of India.

In keeping with this, the revolutionary agenda has long been abandoned for a communist politics based on the mantra of development and the middle and upper middle classes. Hence, a flurry of activities in recent years like the state’s participation at the Davos World Economic Forum, the Invest Kerala Global Summit, projects and proposals related to high-speed rail, metros, airports, seaports involving global corporate capital. The attempt has also been to dispel the negative perceptions about the business climate that had developed in the heydays of labour militancy. But these persisted for a long time after the end of militancy. The CPM-led government’s efforts saw some results: The state topped the highest number of categories in the 2024 Business Reforms Action Plan ranking of the Union government; it ranked among the most preferred states to work for young employees in India Skills Reports; but its claims of nearly 3,50,000 MSMEs opening in the last three years and their sustainability are yet to be verified.

The turn to a PPP model in PSUs is in the context of one of the worst failures of the Kerala Model, the terrible performance of the public sector enterprises (even compared to the poor record in the rest of India). As scholars note (Kannan, K P: ‘Revisiting the Kerala “Model” of Development: A Sixty-Year Assessment of Successes and Failures’), it was a result of inefficient management combined with the patronage of vested and politically powerful trade union interests. Seeking corporate capital and the proposal for new “neoliberal” revenue streams comes also in the context of the precarious public finances of the state: Kerala was ranked 15th out of 18 states in Niti Aayog’s Fiscal Health Index 2025. With historical focus on human capital, funds for capital expenditure have always been small, an unsustainable situation going forward, especially in providing jobs to the vast numbers of educated youth.

The successes of the human development model have generated counter-tendencies like the export of labour, and now students. Student foreign emigration exploded in 2023 to double the number in 2018: 2,50,000. While total inward remittances reached Rs 216,893 crore in 2023, there were outward remittances of Rs 43,378 crore (Kerala Migration Survey). The private universities move by the Left, while seemingly wanting to stem the tide of youth emigration and brain drain in an ageing society, is also an unsaid acknowledgement of the quality of public universities.

The Left’s push towards the market is also occasioned by a unique federal context in the form of unprecedented hostility from the central government (politically and financially, and Kerala is not alone). If Kerala’s finances have improved somewhat in the recent past with an increase of 70 per cent in own tax collection in four years, its losses under GST compensation and central tax shares/grants have been substantial. Kerala’ share of the divisible tax pool has fallen from 3.86 per cent (10th Finance Commission) to 1.92 per cent (15th Finance Commission). Central grants-in-aid fell by 55 per cent this year (Kerala Economic Review 2024). The Left government’s challenge to the Centre-imposed borrowing limits has been referred to a Supreme Court Constitution Bench.

Ultimately, the Kerala CPM’s recent moves exemplify the dilemmas of socialism/communism in a small region enveloped by a globalised capitalism, where the state’s GDP amounts to the same sum that an Elon Musk lost recently in the stock market decline. These dilemmas result in ideological confusions like Chief Minister Pinarayi Vijayan’s praise for Kim Jong-Un, heading a totalitarian dictatorship, as an exemplar of successful resistance to American imperialism, while his party courts multinational and American capital.

Markets and private capital are necessary for a strong economy, but the question for the Left is how to prevent the markets from corroding public goods like health, education, and the environment. Inequalities have increased since the 1990s in Kerala, especially affecting the most marginalised communities — the Dalits and Adivasis (who scarcely benefited from the land reforms), the lower classes, and those who are involved in precarious labour like the currently striking ASHA workers. The local Left has little leverage over the behemoth of global capital. But its abandonment of even plausible egalitarian and redistributive goals bodes ill for Kerala’s famed welfare model and social democracy, which the Left had contributed to building.

The writer is professor, International Development Studies, Dalhousie University, Canada, and is the author of Communism, Subaltern Studies and Postcolonial Theory: The Left in South India