How LDF's handling of three crises could shape the poll narrative in Kerala

The electorate is most likely to rate the govt on its response to the flood, its management of the economy after GST, and its recent response to Covid-19

The tenure of the current Left Democratic Front (LDF) government in Kerala has been dramatic. Right at its midpoint, Kerala was hit by an unprecedented flood that ravaged large swathes of farmland and inundated towns and cities. Tens of thousands of houses were washed away, some 100,000 were severely damaged, and another 700,000, partially damaged. 

It was during this very period that Kerala also faced one of its toughest financial challenges: that of ensuring robust revenues under the new system of Goods and Services Tax (GST) that came into force in 2017. Kerala has been one of the most vocal states in the GST Council, not so much because it is in Opposition with the ruling Bharatiya Janata Party, but more because it remains one of the most affected states in terms of losses in revenue after GST implementation. 

But even in recent months, Kerala’s financial position seems to have been hit harder than peers. And this may play a role in shaping voter behaviour. 

In a year when the economy is still struggling to attain normalcy due to recurring waves of the Covid-19 epidemic, Kerala seems to have been affected more than other states. For instance, its GST revenue is 42 per cent short of expectations in FY21, worse than any other state. Its GST collection will fall 12 per cent from the previous year, one of the sharpest declines among states. Moreover, the dip in its sales tax revenue is also the worst among states, at 13.5 per cent. 

But the direct impact on people is more worrisome. In fact, the impact of Covid-19 on jobs is clearly visible in the Economic Review presented by the government. The number of people employed in factories in 2020 declined by three per cent over the 2019 level. 

Not many states maintain real time data on employment, but Kerala does. And this also means that the state is better able to target beneficiaries during a crisis such as Covid-19. 

Kerala had India’s first lab-confirmed Covid-19 infection—detected in January 2020—and thus became the first to respond to the crisis, which the Centre declared as a pandemic later in March that year. 

Apart from the public health response, Kerala also announced an economic package amounting to Rs 20,000 crore in March, much ahead of the central government's own response. 

“The income losses suffered by the vulnerable sections of Kerala's workforce during the two months since the lockdown began on March 25, 2020 was Rs 16,000 crore, or 1.9 per cent of its annual State income (GSDP). The corresponding estimate for India as a whole was 2.2 per cent of the annual national income (GDP),” the government’s economic assessment notes. “The economic relief package amounting to Rs 20,000 crore on March 20, 2020 was enough to cover the income losses suffered by the poorest sections of the state’s workforce.” 

While the Centre gave food to all beneficiaries listed under the National Food Security Act, Kerala gave a pack of civil supplies to all households in the state. Food provisions were also made to all households with students who could not attend school due to pandemic-led closure. 

The public is most likely to rate the government on its response to the flood, its management of the economy after GST, and its recent response to Covid-19. Interestingly, Kerala utilised a big part of the package to clear its arrears to institutions, contractors, and other agencies, and it could be seen as a major move that keeps all agencies doing business with the government happy.

Now, tourism is a big component of Kerala’s economy. The sector suffered a heavy blow in 2018 due to floods, but made a comeback in 2019, with Kerala recording multi-year highs in footfalls. In fact, foreign tourist arrivals in Kerala grew faster than that in India as a whole in 2019, notwithstanding the dent perpetrated by Covid-19. 

Another important aspect of Kerala’s economy is its dependence on remittances--a fifth of foreign remittances in India flows to Kerala. According to the World Bank’s assessment, global remittances may have declined 20 per cent in 2020, suggesting a considerable dent to financial flows to Kerala. 

Finally, when it comes to elections after 2020, Covid-19 is most likely to play a very important role in the shaping of the political narrative into the election. 

In this aspect, Kerala may have performed better due to its legacy in building public health infrastructure over the past few decades, and that of handling health crises. The current government gained experience in dealing with epidemics, with the Nipah virus spread of 2018. 

Apart from accurately tracking contacts of infected patients, the state strongly supported Covid-19 testing as well. Being one of the most affected states in terms of case load, it raised its testing levels over time, unlike Maharashtra, where testing prevalence weakened after the first wave subsided. The state government also ensured counselling support, covering everyone from children to the elderly during the peak phase of the pandemic. 

If we look at a slightly longer term, it is under the current government’s tenure that health infrastructure was ramped up. For decades, till about 2012, the number of hospital beds in the state remained in the 30,000s, below the 40,000 mark. It is closing in on 60,000 now. 

Until the 1980s, Kerala was among India's poorer states. A higher proportion of the population was poor (52 per cent against India’s 51 per cent in 1978). But the situation is completely different today. While nearly one in three Indians is poor, the ratio is one in ten in Kerala. 

But voters usually have a narrow view of the government’s performance, and rarely do they attribute long-term achievements to the political successes of the running government. Whether the majority of them rate the response to recent crises as satisfactory or not, remains to be seen.