The Kerala Model - EconReads

How Kerala achieved high literacy, long life expectancy and low infant mortality despite modest incomes, and the challenges its economy faces.

Kerala, a state on India’s southwestern coast, became famous among economists for achieving strong human development outcomes at relatively low income levels. This became known as the Kerala model.

The achievements

For decades, Kerala has had:

Near-universal literacy, the highest among Indian states.
High life expectancy, comparable to middle-income countries.
Low infant mortality.
Low fertility, below replacement level since the late 1980s.
Relatively strong public health and education systems.

How it happened

Economists, including Amartya Sen and Jean Drèze, highlighted several factors:

Historical investments in education by princely states like Travancore and by missionary and social reform movements.
Social reform movements that challenged caste discrimination.
Women’s education and status, relatively high compared with many other states.
Land reforms in the 1960s and 1970s.
Public action and political competition, with governments investing in health, schools and the public distribution system.

Remittances

From the 1970s, large numbers of Keralites migrated to the Gulf, sending home remittances that became a major part of the state’s economy, supporting consumption, housing and services.

Challenges

Unemployment: Kerala has had high unemployment among educated young people, many of whom migrate for work.
Limited industry: manufacturing has remained relatively small.
Public finances: high spending and debt have strained state finances.
Ageing: Kerala has India’s oldest population, raising care and pension needs.
Dependence on remittances, vulnerable to conditions in the Gulf.

Health without high income

In the 1990s, Kerala's income per person was close to India's average, yet its infant mortality rate was a fraction of the national rate and similar to much richer countries. This showed that public investment in health, education and women's empowerment could deliver strong outcomes even before a state became rich.

Thinking social progress requires high incomes first

Kerala showed that strong public action on education and health can achieve good human development outcomes at modest income levels, though sustaining them requires economic growth too.

Key takeaways

Kerala achieved high literacy, life expectancy and low infant mortality at modest incomes.
Historical education, social reform, women's status and public action explain its success.
Gulf remittances became a major part of its economy.
Unemployment, limited industry, public finances and ageing are challenges.