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Author | Glassy Sunshine

Editor of this issue | He Jiawei

Reviewer of this issue | Shan Minmin

Image source: "India Channel" WeChat Official Account

Kerala, in southern India, has long been hailed as the "miracle of India," with its outstanding performance in human development indicators, making it a model for "low-income high development" among developing countries.

From a poor border region in the mid-20th century to one of the richest states in India today, Kerala's transformation is unique and complex, worthy of in-depth exploration.

Kerala is located along the southwest coast of India, with a small area but a dense population, approximately 35 million people.

Different from most arid or semi-arid regions in India, the state has a semi-equatorial climate with abundant rainfall and rich natural resources.

The Western Ghats run through its eastern part, bringing abundant water resources and vegetation, providing natural conditions for the cultivation of high-value crops such as rubber, tea, and spices.

More importantly, Kerala has maintained trade links with the Middle East and Europe for a long time. The superior geographical location along the Arabian Sea allowed the region to engage in the exchange of goods like pepper, coconuts, and timber with the outside world several centuries ago.

The integration of diverse religious and cultural beliefs, such as the coexistence of Islam, Christianity, and Hinduism, also laid the foundation for its social tolerance and high level of education.

The development of Kerala can be divided into three main stages.

First stage (1947-1980s): Foundation Period

After the dissolution of British India, the areas of Kerala, which were originally under three political entities, were merged into a state in 1956.

At that time, its per capita income was only two-thirds of the national average, but it led the country in human development indicators.

Government-led large-scale literacy campaigns, the establishment of basic medical systems, land reforms, and caste equality movements made it a model of "civilized poverty."

The "Kerala model" of this period emphasized the concept of a welfare state, building a relatively comprehensive education and medical system through high fiscal spending in the context of almost no private investment.

Scholars called it a "new path of development," advocating that even with limited income, quality of life can be improved through public investment.

Second stage (1980s-2000): Transformation driven by labor export and remittances

Entering the 1980s, Kerala faced economic stagnation, expanding fiscal deficits, and shrinking agricultural investments.

At this time, a large number of laborers went to work in Gulf countries, creating a huge influx of foreign exchange. According to statistics, by 2010, remittances contributed more than one-third of the state's GDP.

This foreign exchange not only supported private consumption but also stimulated the rise of services such as construction, retail, and transportation.

Emigrants invested back home to establish hotels, tourism, schools, and clinics, injecting vitality into the economy, gradually forming a growth path driven by consumption and service orientation.

Third stage (after 2000): New Left transition and integration with private capital

Entering the 21st century, the political landscape of Kerala quietly transformed. Traditional left-wing parties no longer emphasized the slogans of "anti-market" and "anti-capital," but instead accepted private investment, advocating that the state guide market development through infrastructure investment.

The "New Left Alliance" that came to power in 2016 focused on digital governance, urban renewal, corruption-free administration, and modernization of public services.

In this period, Kerala saw a new governance model of "not retreating from the welfare system, but utilizing market mechanisms."

Traditional advantages such as education and healthcare continued to be maintained by public-private collaboration, but industries such as tourism, information technology, natural resource processing, rubber products, and spice extraction developed rapidly.

Family businesses and small and medium enterprises became the main force, nurturing one of the highest entrepreneurial densities in the entire country.

Image source: "India Channel" WeChat Official Account

The uniqueness of Kerala's development lies in the close interaction between its economy, society, and politics.

Economically, it combines resource processing and services, with foreign exchange inflows supporting consumption and urbanization, and non-corporate family enterprises still dominating the economic structure; socially, it leads the country in education and gender equality indicators, with a significant aging population and a better-skilled labor force than most states; politically, leftist parties have long ruled, with strong policy stability, and are good at cooperating with non-leftist groups such as Muslim League and Christian sects, creating a "broad alliance governance."

Despite achieving remarkable achievements, Kerala currently faces serious challenges.

For example, there is a crisis in fiscal sustainability. Aging has led to rising public health and elderly care expenditures, while demand for education and social welfare remains unchanged, leading to continuous expansion of the fiscal deficit. Food production in the entire state is less than 15%, heavily dependent on external sources, increasing pressure on the public distribution system.

At the same time, social inequality is rising. The gap between the elite group and ordinary families is widening in terms of wealth accumulation, and structural inequalities based on caste, gender, and age still exist.

There is also a mismatch between education quality and employment. The quality of higher education is uneven, and there is a shortage of technical talent; meanwhile, the unemployment rate among high-educated individuals remains high, and the outflow of young talent is severe.

Moreover, ecological load is too heavy. Climate change and excessive construction have led to frequent problems such as landslides, soil erosion, and the 2018 flood. Tourism development and real estate speculation have exacerbated ecological vulnerability, and the environmental carrying capacity has reached its limit.

Image source: "India Channel" WeChat Official Account

Kerala's development provides a governance model of "prioritizing well-being before growth" for countries in the Global South. Its journey shows that education and health are not just results, but also drivers of growth.

Through institutional innovation and governance transformation, the state successfully transitioned from "priority to welfare" to "market integration."

For the future, Kerala still needs to continue to make efforts in the following directions: strengthening the awareness of sustainable development, improving the quality of education to match the needs of the job market, balancing urban-rural and class development, enhancing fiscal discipline and efficiency, and promoting the transformation of environmentally friendly industries.

Image source: "India Channel" WeChat Official Account

Kerala's development story is far from over. Its "third transformation"—breakthroughs in areas such as the digital economy, renewable energy, sustainable tourism, and integration into global value chains—is being prepared.

This article is reprinted from an article published on the WeChat Official Account "India Channel" on July 3, 2025, titled "The Kerala Miracle."

Original article: https://www.toutiao.com/article/7556635069605577252/

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