- 17 minutes ago
KM Chandrasekhar, Vice-Chairperson of the Kerala State Planning Board, said Kerala's unemployment rate was 29.8%, compared with 12.5% nationally, and the state wants to halve it over the next five years.
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00:00Good morning to all of you. It's a pleasure to be here with India today.
00:06Thank you, sir. It's our pleasure, too. Good morning, everyone.
00:10Mr. KM Chandrasekhar has taken up the role as a vice chairperson of the Kerala State Planning Board not long
00:19ago.
00:21Just before you took charge of the board, you had headed a high-level expert committee appointed by the UDF
00:29government.
00:30After they came to power, to prepare a comprehensive white paper on the Kerala state finances.
00:36So I thought, you know, we could have an opening question there.
00:39Oh, sure.
00:40So that committee pointed to a few issues regarding the financial state of Kerala, where it said the state had
00:51very high public debt.
00:52And it had committed expenses like salaries and pensions, consuming some 77% of the total revenue receipts.
01:02Also, the capital expenditure, which is, you know, building infrastructure for the future, was just 1.3% of the
01:12state domestic product.
01:16So these were some of the challenges that you highlighted.
01:20So maybe, you know, this is the right time to ask you, how dire is the state's financial?
01:25We know there are a whole lot of positives going for the state.
01:28But when it comes to the financial situation, what is your assessment?
01:32And has the COVID pandemic been, you know, a critical feature to worsen the crisis?
01:39Actually, when you talk about financial situation, what we spoke about was the financial situation of the government.
01:49Not really the financial situation of the state.
01:53Which, as you said correctly, state is not in such a bad way.
01:57But the government certainly is.
02:0077% on pensions you mentioned.
02:03The share of pensions is going up because in the expenditure basket because Kerala is getting older and our age
02:14of retirement is still 56.
02:17We have not been, the state has not been investing enough on capital expenditure.
02:241.34% you said, which compares with 3.01% if you take all the states.
02:31So, real GSTP grew at 5.15% between 2015-16 and 2024-25 as against the national average of
02:485.9%.
02:50Now, manufacturing 13% growth has been there against 17.5% nationally.
03:00Manufacturing, I would say, has not done badly because a large number of small industries have come up with new
03:09technologies.
03:10That's good.
03:12Services grew at half the national rate.
03:15I mean, if you would recall, services was the sector that pulled us up.
03:20But that has not been doing so well in the past few years.
03:27The power sector, we already all know the problems that we face in energy.
03:35And there is high unemployment, 29.8% against 12.5% nationally.
03:44So, there are many, many problems that we face and which we will have to handle.
03:51So, the next question would naturally be, what is the way forward, you know, when you have
03:56these kind of dire situation?
04:00And you mentioned unemployment too.
04:02You have been given the mandate to be a strategic governmental think tank for the government.
04:10And to also generate some innovative ideas.
04:13So, these are early days for you, but still, is there something that you could share with us on some
04:18of the ideas that you could...
04:19Certainly, certainly.
04:20I would be most happy to do that.
04:23Now, one thing I would like to say is that we would like to change track.
04:29Until now, planning has been more or less a very mundane exercise, where you write down,
04:35we will achieve this, we will achieve that.
04:38And, finally, at the end of the...
04:41I mean, generally, the last five-year plan was produced about two years after the plan started.
04:50We wouldn't like to do that.
04:51We'd like to do it by the middle of next year.
04:54Even though we have started late, because of various factors, we started late.
05:01But we would like to completely upend the usual characteristics of the plan.
05:14We would like to, first of all, state what objectives we are going to achieve.
05:22Now, like, for example, GSTP, it is at the rate, monetary, at the, the 16, it's 16 lakhs at current
05:32prices.
05:34We would like to raise it to 28 lakhs, which would mean that we have to grow at the rate
05:40of 7%,
05:40which is not unrealistic, because we have achieved 8% between 2004-05 and 2012-13.
05:52And the country itself is talking of going at 8% per annum growth.
05:59So, we want to achieve 7%, which would mean 28% of GSTP will have to be invested each year.
06:13As against what you mentioned earlier, 1.34%.
06:16So, it is very, very clear to us that we need a lot of money coming in from different sectors.
06:27And our conception is, we have, from now on, a partnership economy.
06:35A partnership, in the sense, not only with the private sector.
06:39Private sector will have to play a major role.
06:41We will bring in our local bodies, make them function better, and make them responsible for better employment,
06:51better investment within their areas.
06:54We would like the cooperatives.
06:55Cooperatives are pretty, they can easily invest a lot of money.
07:00All of them, private sector, the non-resident Keralites, there's a lot of money here.
07:06About more than 10 lakh crores is in our banks.
07:10Then, there is PPP, central funding.
07:13We have not been using central funds very effectively.
07:16We need to do that.
07:17And, all these various sectors, we will have to bring together and create the kind of focus that is required
07:29for sustained growth over a period of time.
07:33And we need also the biggest problem, 28% unemployment.
07:38Our goal would be to halve that rate within the next five years.
07:44Whether we will achieve it or not, I mean, we are changing the structure of planning.
07:50Because our objective now will be, the way we are planning it, we are using what we call the smart
07:56model.
07:57Which has been tried in many countries, the smart model was first brought into public discourse by Tony Blair, as
08:05you know.
08:06That is, the plan should be specific, measurable, achievable, result-oriented, and time-bound.
08:16So, all the proposals that we get from the departments will be in that smart format.
08:26And I've already requested the Indian Institute of Management, Coricode, to help us with this task.
08:34We will also engage consultants, not only from the academic institutions, but even from the private consultancies.
08:45We will engage them so that each department can prepare their projects in the smart mode.
08:52So, this is how we intend to go about it.
08:55And let's hope we achieve something.
08:57Okay.
08:57Yeah.
08:59There are a few questions that comes to a common person's mind when it comes to the finances of the
09:05state,
09:06especially when you have a change of government.
09:10And as you have highlighted in your report, one big issue, one which was debated in Kerala in a big
09:16way, has been the high public debt.
09:20So, one question I would have to ask you is, you know, is it such a bad thing?
09:25And, I mean, what would be an alternative?
09:27Number two is, again, you know, the state has to address issues of salaries and pensions.
09:33And pensions are a huge issue in the state.
09:36And, in fact, you know, the previous LDF government had taken a lot of credit for, you know, giving pension
09:42on time.
09:43And it's a very sensitive issue that way, even salaries.
09:46And finally, you know, the welfare measures which can sort of really deplete resources.
09:50So, when you say you want to approach it in a smart way, how would you also, you know, look
09:56at these aspects?
09:58Okay.
09:59No, the simple, the issue is that debt has undoubtedly surged.
10:04It is the highest in the country today.
10:0935% of GSTP is the highest in the country.
10:14So, we do have a problem.
10:16I don't see why a controversy should arise regarding debt.
10:21Because debt is taken by all countries.
10:24You heard other states also speaking on this.
10:28Everybody takes it.
10:29But the point is that we need to use the debt productively to generate the income required to pay it
10:39back.
10:39Instead, if you just take debt, use it for your revenue expenditure, use it for areas where there is no
10:49return coming, then debt is a problem.
10:53It is a serious problem.
10:55So, that's how we see it.
10:57And anyway, today, the government of India has said that you can keep your debt only at 3%.
11:04And that's another issue, which is an entirely different issue, which we have to look at also.
11:13We don't want to borrow very heavily.
11:16But at the same time, we do believe that when you impose a condition, you should impose it on yourself
11:25also.
11:25So, while 3% is there in the states, it's 4.3%, as you know, for the central fiscal, for
11:36the central fisc.
11:37And they have a slide path.
11:40It would be appropriate if we also get a slide path.
11:44We should bring down the debt.
11:46Debt is not something which we should leave to the people of succeeding generations.
11:54But we will need to go face by face.
11:57And it would be good for the government of India to sit with states which are in real trouble, like
12:04ours,
12:04and see how, over a period of time, we can bring it back to shape.
12:09Great, sir.
12:10In fact, even the previous government had a lot of issues regarding the devolution of taxes.
12:16And we just heard the deputy CM of Telangana also talk about it.
12:22And how do you view the situation?
12:26Because, you know, the union government states that, you know, the vertical devolution of divisible taxes would be 41%.
12:34But the states would, you know, want more of that share.
12:37And, you know, the argument is, you know, you are contributing so much more, you need to get that much
12:42in return.
12:43So, is there a conflict there?
12:46And what would your views be on this?
12:49Now, what I would say is that, of course, there is a demand that it should go up to 50%.
12:57But that is not the major issue that we are facing today.
13:01That will come when the next finance commission again is formed.
13:07We will again ask for a substantial higher vertical devolution.
13:12But, you see, today what is happening is, as I told you earlier, the states are being squeezed.
13:22In addition to what you mentioned, we already have a squeeze on the divisible pool because of cesses and surcharges.
13:35Actually, if you look at the divisible pool, it has come down substantially.
13:40I have some figures here.
13:45It's so much paper that I can't easily locate it.
13:50But we do have a lot of, it has come down dramatically, actually, from 87% in the early 2010s
14:06to roughly 75% to 78%.
14:10Now, it's a big decline because of cesses and surcharges.
14:15So, we are getting less money.
14:18Then, on the centrally sponsored schemes, the share of the centre has gone up to 60%.
14:26While it used to be 40%, we used to get a larger share.
14:32The way in which centrally sponsored schemes are administered, that has also changed because you have to put in your
14:4140% first before you can get anything from the centre.
14:45And it's all monitored through a system called, I think it's called SPARC, for each scheme.
14:53And there is a lack of flexibility in central schemes.
14:58Then, as I mentioned earlier, no slight path has been provided to the states.
15:04And the centre, I mean, actually, I heard Rajdeep earlier speaking, he was talking about the double-engine and single
15:16-engine governments.
15:17It's not what we say in every election.
15:20You will find that the centre says this.
15:23That if you get central, double-engine state, for a double-engine state, we'll always get more.
15:30So, that's their election strategy.
15:32Yeah, you will have to tackle.
15:34Now, coming to the issue of unemployment, which you highlighted in a big way,
15:38the state has its own limitations when it comes to any kind of massive industrialisation, which cannot really happen.
15:46But at the same time, even services is deteriorating, as you pointed out.
15:51There is also the fact that any kind of geopolitical conflicts will have an impact on the money that flows
16:01into the state in terms of remittances.
16:03So, how does, you know, what kind of a plan can be generated to focus on some areas?
16:12I think the last, the previous LDF government had talked about the start-ups industry in a big way.
16:17You know, the infotek parks and so many smaller enterprises were encouraged.
16:23So, is there a programme, you know, in that sort which can generate more employment?
16:29Now, as I told you, so far as MSMEs are concerned, there has been proliferation.
16:35And the start-up mission has also done a lot of good work in setting up various centres where they
16:44can really, they can develop their own expertise.
16:51Recently, you know, when I was president of the Shree Chitra Institute of Medical Sciences and Technology,
17:00I had started an incubator, a business incubator there called TimeEd.
17:08Now, the number of industries here, in the medical devices industry, it's roughly 110 units have been there in Kerala,
17:21110 units.
17:23And they have now formed an association and so on.
17:27But it's happening, I mean, in the small-scale sector, in the medium sector, certainly a lot of growth is
17:34taking place.
17:35There is a lot of potential.
17:38We have to look at the various sectors, medical devices.
17:42There's one area, gold, furniture, aviation hub, space, artificial intelligence, high-value tourism.
17:52Tourism, actually, the number of foreign tourists coming into the country, into the state has declined.
18:00So that, we need to look at higher value.
18:04Sports and creative economies, all these are areas where there is a lot of employment potential.
18:15So we will need to, we have already done a few things.
18:21The cabinet has already approved a scheme called Saral, which makes it far easier to start industry here.
18:31We have started a single window approach called Invest Kerala, where the Chief Minister himself will be sitting to ensure
18:39that it goes through and the collectors also will do that.
18:42And so we are trying to solve this problem in the best possible manner.
18:51It will take time, it will take effort, and it will take a whole lot of joint endeavor by all
19:01the people of Kerala to reach where we want to reach.
19:04Okay.
19:05Since time is almost up, I wanted to just ask a final question to you.
19:10You have been cabinet secretary.
19:14Yeah.
19:15How do you see whatever is happening at the national level?
19:20We are going through a phase where high oil prices are upsetting everything.
19:24We have seen the value of rupee plunging.
19:26We have seen the stock markets.
19:27Yesterday, there was bloodbath on the stock markets.
19:31And very, very highly volatile scene, which is hurting a whole lot of industry, businesses, etc.
19:39What is your general outlook on the economy?
19:42No, I think we are facing a lot of many problems, as you said.
19:48Primarily because we have an unnecessary war in the Middle East, an unnecessary war between Russia and Ukraine also.
20:00We have become victims of that.
20:03So that is affecting us to a considerable extent.
20:09But at the same time, we have a growth rate.
20:12According to the latest in the last quarter, the growth rate was 7.8%.
20:17So there seems to be, it's something which I really don't understand,
20:22a complete dichotomy between the way the stock market functions and the growth rate figures.
20:33So if the growth rate is so high, it should reflect in the stock market, to some extent at least.
20:39Instead, the stock market is completely reflecting something else.
20:45It's just going down, the wealth is going down.
20:48That's the point.
20:51Okay, great.
20:52Thank you so much, sir, for spending time with us and explaining to us the state's finances.
20:57And it's a very crucial moment for the state.
20:59And we hope and we know that it's in safe hands under your stewardship at the board.
21:07Let us hope for the best.
21:08A big round of applause to KM Chandrasekhar.
21:12And wish us luck, all of you.