Remittances, consumption and economic growth in Kerala : 1800-2000

Kerala’s lopsided development, human development before economic development, has been characterized by steady economic growth since 80s with acceleration in the 90s. The leading sources of growth are the services (tertiary sector) instead of the conventional commodity producing sectors (primary and secondary). Further analysis shows that these services are non-tradable in general and in particular, transport, trade, hotels and restaurants, telecommunication and other services. The surge in growth has emanated mainly from the increase in consumer demand in favour of durable goods. The inability of the manufacturing sector to meet the growing demand chiefly from migrant households for consumer durables has resulted in the increase in regional trade and transport. In the case of telecommunication, the demand came mostly from the large number of ‘spouses away households’ and from ‘elderly living alone households’ in the state for keeping in touch with their near and dear ones living within and outside the state. The combined effects of forward and backward linkages of the growth in tourism, trade and transport have resulted in the growth of hotels and restaurants. The durable goods accumulated by the households in the 80s have generated the growth of services in the informal sector for the repair, maintenance and servicing of these goods in the 90s. In addition, the mushrooming of private institutions in health and education has also contributed much to the growth of other services during the period. Commercial banks have not played any significant role in the intermediation of the huge surplus generated by foreign remittances for the growth observed in the 80s and 90s since the credit-deposit ratio continues to show its declining trend during the period. In the absence of proper accounting of the savings generated in the economy, it is argued that source of finance for the growth of the service sector has come from either the informal credit market or own-funds or both. This consumption-led growth cannot be sustained unless the state actively involves in locating the hidden markets for skilled labour globally and provide world-class training facilities for such jobs for their migration. This would mean that the growth strategy should concentrate on export of services based on skilled manpower and the export of skilled manpower itself instead of labour intensive and land-intensive traditional commodities. Another strategy for the sustainable growth is to increase the share of the fast growing domestic tourism by innovating institutions for cost effectiveness to attract such tourists. Finally state should create forward linkages of the huge consumer durables acquired by the households with the rapidly growing informal sector for repair, maintenance and servicing of durable goods. This involves, among other things, reverse engineering for developing the production technology of spare parts and organising it at the household level instead of factory level for price competitiveness. Key words: remittances, lopsided development, linkages, durable goods, migration JEL Classification: 053, E21, F 2

Social returns from drinking water, sanitation and hygiene education : a case study of two coastal villages in Kerala

Social returns from investing in water supply, sanitation and hygiene education (WATSANGENE) have been estimated from the UNICEF model of water supply, sanitation and hygiene after modifying it using Sen’s commodities and capabilities approach. The various characteristics of the commodity, WATSANGENE, affect significantly the functioning levels of people with respect to poverty, health, longevity, education and quality of environment. Among them, education, longevity and quality of environment have not been evaluated because of the high degree of subjectivity in their measurement leading to wide margin of errors. Hence, only two of them - poverty and health- have been taken up for valuation by case study method and by “with” and “without” project approach. For the case study, two villages from the coastal belt of Kerala inhabited mainly by fishing community were selected. The study clearly shows that the social benefits are underestimated if the travel time is valued by shadow wage rate instead of by the value of energy expended. For example, the value of time saved “with the project” is only 35 % of the value of energy expended for fetching drinking water from distant sources. In the case of sanitation, it is only 25 % of the value of energy expended. The averted annual public expenditure per household resulting from the elimination of water borne and sanitation related illness with the project is Rs.682. The private annual expenditure per household for treating illness is Rs.510. The cost of providing water supply, sanitation and hygiene per household is Rs. 12,086. The ratio of benefit (present value of the recurring expenditure) to cost is 3.6 in the case of shadow pricing of travel time and 9 in the case of energy expenditure method. This result supports strongly that capabilities approach should be used for the valuation of benefits from water supply, sanitation and hygiene education. The study shows that provision of WATSANGENE in the coastal belt qualifies even under commercial borrowing. JEL Classification : H43, I31, I38 Key words : social returns, UNICEF model, capabilities and functionings, shadow pricing, valuation of energy loss

Drinking water and well-being in India : data envelopment analysis

The study examines the use of Data Envelopment Analysis (DEA) for the estimation of the well being from drinking water using ‘commodities and capabilities’ approach. DEA uses the general purpose linear programme version of the input oriented multi-input multi-output model for the estimation taking state as the decision-making unit. The transformation efficiency of the water characteristics into achieved capabilities (free from morbidity rates of water borne diseases) shows that Punjab has the least efficiency while Kerala and Orissa as the Paretoefficient Peer states. The major reason for the input use efficiency in Kerala may be due to the cultural practice of boiling drinking water before consumption. In the case of Orissa, it can be attributed to better hygienic water handling practices. One such indicator, taking water from the storage containers using vessels with handles, is very high among the households in Orissa. Keywords: Well-being, Morbidity, Capabilities, Data Envelopment Analysis JEL Classification : H41, H42, I31, L9

Dynamics of rural water supply in coastal Kerala : a sustainable development view

This paper examines empirically within sustainable development framework the dynamics of coverage in rural drinking water supply of 180 demand-driven schemes from Malappuram, predominantly a coastal district of Kerala State. The methodology for the analysis comprised (i) multidimensional specification of sustainability in terms of attributes relating to source, technology, quality, finance, institution and hygiene behaviour and (ii) estimation of the degree of sustainability using models of vagueness. Two methods of ‘vagueness’ viz. ‘supervaluationism’ and ‘fuzzy inference system’ were applied to identify systems that are at or below the sustainability line. Results show that sustainability due to source and quality is lower in schemes from non-costal regions, whereas sustainability in dimensions of finance, institution, and hygiene behaviour is lower in coastal regions. Empirical analysis of ‘marginal systems’ indicates that gender participation; female education and income have favourable impact on sustainability of schemes in rural areas. Key words: Sustainable development, Vagueness, Supervaluationism, Degree theory, Fuzzy inference, Rural drinking water supply. JEL Classification: Q56

Pricing with changing welfare criterion : an application of Ramsey-Wilson model to urban water supply

Tariff rates based on Ramsey - Wilson model of changing welfare criterion satisfying equity and efficiency have been estimated for three categories of consumers of an urban water supply in India. The design necessitates values of marginal cost and price elasticity. Paucity of data severely restricts estimation of marginal cost compelling to use breakeven as proxy. Price elasticity is obtained from household expenditure data by applying recoverability theory suggested by Pollak and Wales. The effect of household composition on elasticity has been eliminated by expressing variables on a per capita basis using adult equivalent scale (AES). Calculation of AES for water is based on Prais-Houthakker incremental method. The scale indicates that it is totally different from Amsterdam scale, the AES of food. Maximum welfare is given to small quantity consumers by charging a rate below breakeven combined with a subsidy arising from the surplus generated in the markup of large quantity consumers. The middle group is charged only the breakeven rate. The model can be generalised to any number of groups by assigning different welfare weights ranging from zero to one. The model breaks down if the rate exceeds stand-alone cost. JEL Classification : H41, D4, Q25 Key words: tariff rates, second best prices, adult equivalent scale, welfare weights, stand alone cos

Gender bias in a marginalised community : a study of Fisherfolk in coastal Kerala

Empirical analysis of female-male ratio in Kerala reveals that two communities, Fisherfolk and Scheduled Tribes, have gender bias in their population unlike rest of Kerala. An in-depth study on fishing households from two coastal hamlets in the state not only validates the lower proportion of females in the community statistically but also provides justification of Sen's alternative version of "cooperative conflict" model as an explanation for the lower well-being of females. All four basic functionings - morbidity, longevity, education, nutrition- estimated from survey data using capability approach show female deprivation. Further, it provides evidence to argue that lower bargaining power of females in the intra household distribution of resources emanates from their worse breakdown position, their valuation of family interest above self-interest and their lower perceived contribution to household opulence. JEL Classification : J16, C70 Key Words : deprivation, capabilities, well-being, co-operative conflic