Why Kerala loves lottery tickets but detests big businesses

It is well established that the people of Kerala are generally risk-averse, and lack an entrepreneurial spirit, unlike, say, Gujarat, Maharashtra, or Tamil Nadu. Being employed and earning a salary is preferred, even if it involves migrating abroad. The inflow of remittances has driven consumer demand for durable goods and services, boosting sectors like trade, transport, hotels, and telecommunications. The most common and probably only thriving business activity in this consumer-society is retail trading; it involves commission and margin, and is yet another version of a low-risk activity without directly taking up substantial entrepreneurial risks. In short, people are willing to take minor risks, such as buying a lottery ticket, but shy away from substantial entrepreneurial ventures.

Generations brought up by an education system obsessed with academic excellence, always keen to pinpoint mistakes and find faults, seem to have instilled strong inhibitions against taking calculated risks in life. The political leaders who emerge from such a society also echo and exhibit the risk-averse attitude prevalent in society. They often resemble the lottery sellers loudly proclaiming, ‘₹50 crores! ₹50 crores! Bumper prize!’ while investing efforts equivalent to the relatively small price of the lottery ticket.

The reality is that decisions of a smaller scale, involving smaller investments (of time, effort, and money) often fail to impact the concerned sectors or even touch the lives of a large number of citizens. The ability to see the larger picture and set macro targets requires an understanding of the larger business ecosystem and bigger risk-taking. Government policy decisions — macro-regulatory in nature — should ideally enable citizens (private enterprises within the economy) who can amplify and show results of considerable magnitude.

However, in a myopic society, interventions and announcements tend to be ‘by the government, for the government and of the government’ and strictly in the public sector. They are ad hoc, event-centric, and reminiscent of lottery announcements — loud and promising the moon, but unlikely to materialise. Announcing and inaugurating innumerable ‘world-class’ institutions is the most common and probably the most unimaginative, yet repeated activity of any political dispensation in Kerala.

Existing institutions, be it hospitals, schools, or colleges, get renovated with huge ornamental gateways and signboards — the louder and bigger, the better the institution! Generating jobs for a handful, mostly in low-grade positions, becomes the most usual collateral benefit of establishing new institutions. Through macro policy interventions, we could alternatively generate thousands of employment opportunities in the private sector, such that government jobs become the least preferred resort. But we repeatedly miss the woods for the shrubs.

Politicians across the spectrum tend to favour less risky small and irrelevant decisions but unrealistically hope for windfall results. This is so very reminiscent of the hopes of the person buying a lottery ticket! Achieving big targets through a cleverly crafted buoyant economy on the other hand requires understanding big data and statistics, robust market intelligence, analysis of future business opportunities, and solid business acumen. It requires efforts in restructuring the ecosystem for every sector, making it an inspiring experience for investors and enterprises.

The universal conundrum is that governance often becomes obsessed with the process within the administration, and forgets the purpose to be achieved outside it. For example, the MNREGS, initially introduced as a social security measure for the unemployed, has now become a regular scheme across India with defined targets and performance indicators. The uncomfortable truth is that the awards for the best-performing districts under the MNREGS highlight not any achievement but the lack of adequate local job opportunities in the local economy.

The focus on executing MNREGS procedures has overshadowed the macro goal — that employment from regular economic activities should be the norm, and government scheme jobs should be the fallback. Now imagine an entire economy and its various verticals sought to be micromanaged by the State and a bureaucracy obsessed with its internal processes!

For example, public transport policy gets reduced to ‘government-run’ buses, and making the state transport corporation viable becomes the sole target even if it involves penalising and discouraging other bus operators. The popular imagination also excludes private operators as part of the public transport ecosystem. Annihilating efficient private players to protect inefficient and small-minded public sector entities results in a stagnating economy and increased hardship for the public. The same applies to every public sector intervention where the private sector (read citizens) is perfectly capable of running it on its(their) own.

The bureaucracy invariably overestimates its role and contribution in running the economy, whereas it only has the roles of a facilitator and a regulator. Plying buses, supplying electricity, Uber-like transport aggregation business, running OTT platforms, setting up telecom fibre networks, providing software services, computer hardware supply, printing and publishing, conducting book fairs and food festivals, manufacturing ships to furniture, selling coconut oil, fish, milk and poultry, running hotels and bars — you name it, the bureaucracy tries to become a player through the public sector. Invariably it becomes a white elephant that then feeds on taxpayers’ money to pay even the salaries. The lack of business acumen in society, particularly at the political cross-section, leaves the aggrandisement by the bureaucracy unchecked, distorting the market at the expense of the exchequer.

So, we end up spending our own money to hurt ourselves. A society that lacks entrepreneurial vibes would naturally have a disadvantage, but an enlightened leadership would not exacerbate this disadvantage.

While not every politician needs to understand or engage in business, a select few with a comprehensive understanding of business dynamics should steer policies that have economic implications. Those devoid of business acumen can excel in driving welfare departments with compassion and administrative expertise. However, steering a state’s economy towards a booming business environment demands leaders who grasp both theoretical frameworks and practical business dynamics.

The lack of representation from investors, businessmen, or entrepreneurs within the bureaucratic advisory role hampers realistic economic interventions. Economists are not entrepreneurs, and do not necessarily understand business by any stretch of the imagination. But, effective policy formulation requires voices with practical business acumen to guide decisions within the political leadership. This is a long-standing deficiency undermining effective economic governance in Kerala which stops us from understanding simple facts as a booming economy will automatically fill in the coffers, and not vice versa.

Kerala’s high Human Development Indices (HDI) provide a solid foundation for achieving remarkable economic growth if the state adopts a business-friendly policy framework that unshackles the true potential of its citizens. The collective misplaced obsession with small things skews policy to cause regulatory shackles on education, commercial agriculture, tourism, and hospitality. This approach tends to favour small and marginal players, mistaking it for ‘welfare administration’, and disincentivising bigger players and huge profit-making ventures. Further, reducing taxes and overheads is crucial in a state like Kerala where the cost of production and wages are already high.

An enlightened leadership would focus on aligning policies and initiatives along with rationalising taxes and user charges with the intention of fostering an environment where entrepreneurship can thrive and significantly contribute to the economy. The moot question is why the political economy of Kerala never threw up an entrepreneur representative in electoral governance to articulate such thoughts from within the system. Maybe it is connected to another quirky fact that though more than 50 TV channels and more than 12 major news channels beam content 24X7 in Kerala, there is not a single dedicated business channel or a business newspaper in Malayalam till date!

(Prasanth Nair is a civil servant and author. X: @PrasanthIAS.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.