Practice Insights > Notes on Strategy

Governance of Post-Disaster Kerala: Some Crucial Aspects

V Santhakumar

1. Introduction

My impression of the debates on rebuilding the infrastructure in Kerala, post the floods, is that they move along certain overrated and not easily realizable directions, neglecting certain crucial aspects. The money that has been mobilized or the investments that have been assured of, so far, indicate that there may not be a drastic increase in the quantum of investments in infrastructure in the near future. There may be an organic or gradual improvement in infrastructure based on domestically available resources for this purpose, which is desirable because an excessive supply of infrastructure (considering the internal demand reflected in the willingness to pay) based on borrowings, though politically attractive, has long-term social costs.

The recent floods have highlighted the social, economic and environmental vulnerability of man-made structures and their management in Kerala. They have also exposed the gaps in infrastructure development and management, which need to be bridged to make the state resilient in the face of major natural disasters. Though more financial investments are needed for this purpose, the crucial requirement is the reform in regulations to make these strict in certain cases and flexible in others, and end the arbitrariness and corruption in their enforcement. I focus on some of these issues in this short note. My past work on different aspects of Kerala’s economy, including agriculture, water resources, and electricity and on the issues of institutional reforms, informs this note.

2. Infrastructural Projects

There is a need for realism and a gradualist approach towards all major infrastructural investments. For example, the Kerala Government’s decision to not give priority to the plan for high-speed rail connectivity between its northern and southern parts is a step in the right direction. It is financially and socially wiser to enhance the existing rail connections of two to four lines and make it fully electrified so that both long- and short-distance trains can achieve a speed of 100-120 KMPH on an average. Such `marginal’ investments can reduce the travel time between north and south Kerala up to five to six hours. Politicians and development enthusiasts have a tendency to propose costly infrastructure projects. My impression is that there may not be an adequate willingness to pay for high-speed road corridor between the north and south of the state (if we consider the toll tax on users and the resources required for the project). A desirable strategy for improving the road connectivity would be the completion of planned bypasses on time, construction of flyovers over congested areas and where the widening of existing roads is difficult or costly due to land acquisition.

The reason for mentioning these examples is to argue that taking effective small steps to improve the quality of infrastructure is more beneficial than wasting social energy on controversial projects. Though there has been a marginal improvement in the project implementation under the current government, Kerala suffers from long delays in the completion of infrastructural projects due to procedural, bureaucratic or legal issues; opposition by sections of the affected people; or the lack of adequate financial allocations. Hence, an important reform in the governance of infrastructural investments has to be in project implementation, i.e., taking up viable projects for which there are adequate (assured) financial resources; and completing these on time.

3. Vertical growth

A number of commentators have noted the need to prohibit construction of houses in the `vulnerable areas’ of Kerala. These include steep slopes which are likely to experience landslides and low-lying areas which are prone to floods. During the recent floods, the maximum number of human casualties were due to land-slides in residential areas. Marking out such areas based on local altitude or closeness to water-bodies is technically not difficult. There is a need to bring in regulations that discourage the construction of all kinds of buildings in these areas. The people who own land there will need to be compensated for it and financial assistance will have to be provided to them to build their houses elsewhere. This may be a new category of people who require such support in Kerala, which has been fairly successful in addressing the conventional landlessness or homelessness. Group housing schemes are a viable option that can be considered for these people.

The preference of Keralites to construct independent houses and the consequent horizontal expansion of human settlements will not be desirable in the long-run. The cost of provision of public services such as electricity, safe water supply, hygienic sewage-disposal, etc will be higher leading to an increased cost or poor quality of services, as in the case of electricity. Over-the-ground electricity connections to independent houses are costly and these would increase the distribution losses and also make unscheduled power outages common, especially during the monsoon. There can be shortages of safe-drinking water supply or of waste and sewage disposal.

There is a need to encourage vertical growth of human settlements in the state. The advantages of living in independent houses and homesteads with farms can be retained if more apartment buildings are promoted in rural areas, so people can live close to their low-lying homesteads or fields. This movement towards a vertical settlement can be facilitated in a number of ways.

• Discouraging all kinds of construction in vulnerable areas (such as low-lying paddy fields). Those who are affected by such regulation and require financial support can be rehabilitated in apartments.
• Regulating that all independent houses pay for the actual cost of electricity supply (including the possible distribution losses and maintenance changes due to the need for over-the-ground lines); and, actual connection-cost of safe water supply and sewage disposal (not pit toilets) may enhance the demand for apartments.
• In my view, the design of building tax can be tweaked to make vertical settlements attractive. Instead of the prevailing practice of fixing the tax on the basis of the plinth area of a building, it can be based on the land area used for its construction. This will increase the effective tax on independent houses. I am not presuming that fiscal incentives or legal instruments alone can encourage a substantial section of Keralites to prefer vertical settlements. It may require a cultural change facilitated by social and behavioural changes, which is mentioned in the last paragraph.
• The transition to vertical settlements may require private investments in apartment construction. If we look at the real estate scene in Kerala, we can see certain trends. There are very few reliable and financially sound apartment builders, the others are fly-by-night operators. I hear that a number of these operators have become bankrupt after the demonetization program of the Central Government. A major part of the purchase of land and buildings continues to be funded by unaccounted money (that without paying due taxes). The regulation of building construction, though may be marginally better than that in other states, is marred by corruption. If we take housing as an important component of infrastructure in an emerging Kerala, there is a need for better regulation and transparency in real-estate activities. Housing is a private asset and scrupulous private companies that are willing to play by the rule of the land must be encouraged. These companies should get protection from the rent-seeking elements of the administration. Moving up the equilibrium of the real-estate sector is an important governance reform that needs to happen in Kerala.

4. Policy on reservoirs

Water reservoirs have multiple purposes; hydropower generation is one among them. Due to a number of reasons, the water reservoirs, which are under the control of the Kerala State Electricity Board (KSEB), are operated only with the objective of maximising power generation. This is understandable since the cost (especially, the operational cost) of hydropower is the lowest. However, this has certain drawbacks considering the climatic conditions of Kerala. If the water from the initial rains of the South-West (S-W) monsoon is stored in reservoirs or used only for the production of hydropower, these reservoirs may not have adequate capacity to retain water throughout the monsoons. When there is heavy rain, there is already an increase in the water level in the mid- and coastal parts, which increases further if water from the highlands also reaches these areas immediately. This is the time when the retention capacity of the reservoirs is crucial, at least, for a few days. However, this retention capacity would be available only if the water received during the initial periods of the S-W monsoon is used up quickly to generate hydropower and/or drained out so as to make room for more. The KSEB may argue that they try to generate maximum quantity of hydropower during the initial days of the S-W monsoon. However, the power generation capacity (or the number of turbines) may not be enough for this purpose. Also, there is some merit in having excess generation capacity for this purpose. Moreover, if there are maintenance shutdowns of some generators during this period, it will further reduce the hydropower generation capacity.

My impression is that the KSEB operations of water reservoirs are focussed at maximising power generation and not at increasing water retention capacity so as to avoid floods in the low-lying areas. Flood control has to be an explicit objective of these reservoirs. This may reduce the overall quantum of hydropower generation within the state but it can be mitigated to some extent by selling hydropower to the national grid during the monsoon (which may be the case, currently too). However, even with the revenue from the national grid, there could be a reduction in the revenue from hydropower generation, if flood-control is also taken as the objective of reservoirs. However, this loss in revenue needs to be considered as a part of the social cost of flood control.

Given the need to expand the objectives of the operational policy of reservoirs, it may not be ideal to entrust the entire responsibility of it on the KSEB. The discharge from reservoirs has to be seen as an externality (which can be positive or negative depending on the situation) and there has to be social control or regulation of this externality and an appropriate mechanism to manage it. This is especially so since there is a certain legal separation of the KSEB from the State Government at present. The new regulatory mechanism for managing reservoirs should include expertise on weather prediction, flood-forecasting and also the use of optimization programs that maximize the social benefits from reservoirs with multiple objectives.

5. Maintenance of man-made and natural assets

The governmental system has higher incentives for the creation of new assets than for maintaining man-made or natural assets. The absence of adequate maintenance affects the functionality of these assets and necessitates earlier rebuilding or repairs. Moreover, in the case of natural assets like water channels, inadequate maintenance can aggravate the negative impacts of natural events, like heavy rainfall. Therefore, there has to be a greater focus on the maintenance of man-made and natural assets.

There are a number of activities which reduce the functional capacities of natural or man-made water channels. These include the dumping of solid waste, construction and other activities close to these channels; the absence of periodical cleaning; uncontrolled vegetable growth; and, so on. Though the local self-governments are responsible for the maintenance, my impression is that this is not done in earnest and that their focus is on taking up new projects and the expansion of social security schemes. There has to be a tangible improvement in the local governance for this purpose. One has to analyze if the mechanism of allocation of public resources to local governments inhibits their will to carry out maintenance. The expenditure for maintenance may not come under `plan funds’, and most local governments may not have enough local revenue to meet the maintenance expenses. (The resources for NREGA may be used for this purpose, which will require a maintenance plan for its utilization.) How to reform the functioning of local governments so that these become more sensitive to the issues of maintenance is a crucial question.

The maintenance of man-made assets like roads and culverts is an equally important challenge. Most of these may come under the state government departments, such as the PWD (Public Works Department). The rainfall pattern of Kerala causes damage to the roads frequently. Minor repairs, immediately after the damage or the damage-causing event, would not only keep the roads functional but may also reduce the overall cost of maintenance. In this context, it may be better to assess the experience of `build and operate’ contracts that have been used for the construction and maintenance of roads in some parts of the state for its potential coverage of the others. A regular patrolling system to inspect the condition of roads, an information system to note minor faults, and an immediate response system to repair these, need to be in place. The use of GPS makes this easy. The financial allocation system for the PWD would have to change to make such periodical repairs possible.

6. Transport solutions

An enabling approach towards taxi aggregators (two- and four-wheelers) as ancillary public transport within cities and towns and to connect with rail (and metro) transport is the need of the hour. The benefits of such a transport solution are well known. Cab and scooter taxies, though a little more expensive than public buses, are more flexible and time-saving. The operation by aggregators enhances the capacity utilization of the fleet of cars and scooters, which reduces the cost to the customer and increases the revenue to the operator (through the increase in the number of trips per vehicle, per day). This reform would lead to an increase in taxi operations, leading to a consequent increase in employment. The easy availability of taxi may also reduce the number of private vehicles and consequently a section of people may stop buying/owning cars or scooters for personal use. The clout of the trade unions of taxi-drivers may be dissuading the government from taking an enabling approach towards aggregators. In the light of the fact that there have been attempts to create local (trade-union controlled) aggregators, these have not been very successful, there needs to be an attitudinal change. We may have to view this as a transitional problem, and that the state will benefit from taking a pro-active approach in facilitating cab- and scooter-taxi aggregators.

7. Public-Private Partnership

Public-Private Partnership (PPP) has become an important part of infrastructure development in India. To a great extent, Kerala is a pioneer in using PPP for infrastructure development with the Cochin International Airport Limited (CIAL) which was followed by the privatization of airports in Delhi, Mumbai and Bangalore. However, the PPP model that is used in Kerala is of a different type. Due to the initial sale of shares of the infrastructure project to the public at large or to a number of individuals, there is no private company which dominates the share-holding of these projects. The state government continues to have a major role in the decision-making on investments and the pricing of infrastructure services. In my view, this Kerala model of PPP has major advantages even though there could be a few minor limitations. Let me explain these.

Most of the infrastructure services, such as airports or roads, have certain features of natural monopoly. It is better to have one airport in a city of a reasonable size, like Kochi. When there are more than one airports in a city, due to historical reasons or military purposes, as in the case of Kochi or Bangalore, passenger transport is allowed from only one airport to make it financially viable. The airport operator can function as a monopoly (in terms of fixing landing changes), creating social losses. It is better to have government-controlled airports to minimize these losses. However, such a control would be difficult if one private company has a dominant position among the shareholders of the airport project. In my view, the dominant position of the state government in the PPP airports of Kerala has helped in reducing this social cost.

The advantage of having a major private partner (possibly in collaboration with international partners) could be in its ability to bring in resources and global practices in the construction and operation of infrastructure projects. The absence of such a partner may lead to poor designs and customer services. The international airport in Kochi has encountered these problems in its initial stages. Ideally, they should have constructed the initial building in the manner that it could be extended in a modular way, as and when required. We can hope that adequate lessons have been learnt from this experience and the situation of the Kannur airport would be different. Despite these issues, the Kerala model of PPP in infrastructure has the advantage of government control and it may be pursued with relation to other infrastructure projects too.

The politicians and policy-makers in Kerala have to rethink their position on PPP, in general. There are two tendencies observed. In certain cases, there is an ideological opposition to PPP (without analyzing the merits and demerits in specific cases). Secondly, probably because of this opposition, some political leaders go overboard on PPP without understanding if or which form of it is most suitable in a specific scenario. Neither of these two stands is socially beneficial. Though PPP was seen as a panacea for all infrastructural ills of the developing world a couple of decades ago, this enthusiasm has disappeared after the actual experience. PPP can be a useful strategy if considered rationally, on a case-to-case basis.

8. Private Investments

A similar change in approach is needed towards the facilitation of private investments in the state. Such investments are inevitable for the development of the state. It appears that the conventional ideological opposition to private investments among almost all mainstream political parties (even though the left parties may take such an adversarial view when they sit in opposition) has declined and is currently limited to a few fringe groups. However, the state is yet to put in place a governance system to facilitate private investments that is compatible with the principles of a liberal democracy. Political leaders of both the left and the centrist parties think that such investments have to be brought in through the direct mediation by the politicians/officials. The difference between two competing coalitions seems to be in their perception of who is honest/corrupt broker or intermediary to facilitate private investments, not in the need for intermediation. This is not a sign of good governance. The attempt should be to make the system of governance at all levels transparent and capable of providing certainty in terms of decisions so that any potential investor (small or big, with or without the ability or willingness to contact politicians or senior officials directly) should be able to make investments as long as he/she is willing to play by the rules of the land.

In my view, the absence of such an improvement in governance can be costly in multiple ways:

(a) The direct contact between capitalists and politicians/officials can be the cause (or false allegations) of corruption, and the consequent controversies can delay investments and delegitimize private investments, in general, in a state like Kerala.

(b) The political establishment should be able to exercise adequate supervision of the investment facilitation process to ensure that it meets the requirements of society at large and follows the rules of the land in letter and spirit. There would be a decline in the legitimacy of the political establishment if it is involved in the direct facilitation of private investments.

(c) The terms and conditions arrived at through the direct contact between the political establishment and capitalists need not be the most appropriate ones. This could be due to the absence of a competitive environment for such investments and can lead to a situation where the state is stuck with less rewarding investments in the long run. The `smart city’ project in Kochi could be an example in this regard.

(d) The facilitation of investments through direct contact between politicians and capitalists may work against new or small or relatively unknown investors or those who do not have the required social and political capital. This may, in turn, work against the quantum and quality of investments. Like any other aspect of economic activity, private investment also requires a higher level of competition to make it productive. The absence of adequate competition due to the process of intermediation may work against the quality of investments.

This is not to argue that the political establishment should not have a role in the facilitation of private investments. It should closely monitor and make/change rules to ensure that adequate private investments which meet the economic, social and environmental needs of Kerala are being made.

9. Laws and regulations

This brings us to another aspect that needs to be improved—the making of rules/laws. It is not unusual to see legislators translating their wishes or pet slogans into laws without considering the easy of enforcement or the costs that these impose on society. It may also create unintended distributional issues and uncompensated losses to some vulnerable sections of the society. Politicians make laws as a sign of their commitment to a particular agenda promised to their voters and the enforcement of these does not concern them or the voters, greatly. To a significant extent, this problem is seen in the regulation to protect paddy fields or wetlands in Kerala.

What is the ultimate objective of this regulation? Is it the protection of paddy cultivation or that of the wetlands? If the latter is the goal, encouraging farmers to keep low-lying lands uncultivated would be much better. Do we have a compensation mechanism to prohibit construction and other agricultural activities in the low-lying fields? No. This is so since all those who are affected by such prohibition need not belong to well-to-do sections of the society. If we plan to provide compensation to some people, is that accounted for as part of the cost of enforcement of this regulation? Do we have a workable enforcement mechanism for this purpose? In general, there should be a clear goal for each regulation and the articulation of this goal has to be the main role of political functionaries. We should be selecting the regulatory route which imposes a minimum cost on society to achieve a pre-determined goal. The ease of enforcement and the ability to respond to the changing socio-economic conditions and other such considerations should be taken into account while selecting a particular legal or regulatory mechanism to achieve a specific social goal. This is rarely attempted in Kerala and so there are adverse consequences.

10. Land reforms

To a great extent, this ambiguity can be seen in the enforcement of land-ceiling act or land-use regulations in the state. Given the decline in the profitability of plantations (relative to the cost of land in Kerala), there is no rationale in restricting the use of this land for other purposes such as sustainable tourism. Though the concerns about inequality driving the enforcement of land-ceiling are understandable, there have to be innovative ways to use the land productively. I do not think that allowing private parties to pool land for development purposes is a desirable strategy for Kerala. This may have implications not only on inequality but also on efficiency. Such private ownership may lead to relative under-utilization of land. In essence, land-use regulation requires substantial reforms in the state to enable post-disaster development.

In this context, let me outline briefly the features of a desirable land management strategy. There is a need to classify land all over the state into a few categories of possible development activities that can be permitted there. The need for the prohibition of construction of houses on steep slopes and flood-prone and low-lying areas has already been mentioned. Certain low-lying areas may be used for appropriate agriculture, like paddy cultivation, or semi-intensive aqua-culture. Similarly, some of the steep slopes may be used for soil conserving plantations. However, a major part of the land within the state may come under what can be called a restrictive development zone. (These may include environmentally vulnerable/fragile areas/zones in the high ranges). There are other areas where development, including the construction of high-rise buildings, can be permitted. Such restrictions on certain types of land and enabling provisions on others would reflect in the land prices (as these are a reflection of the future investment potential of the land).

We should be able to appreciate that the restriction on development in certain areas is for the benefit of the state. Those who benefit from land-development restrictions may have to compensate those who are likely to incur losses due to these restrictions. This may be operationalized through a development tax on lands where development is allowed, and by providing financial support to those whose land cannot be used for construction and other such purposes due to the regulations. Such financial support can be used in a way that people move towards settlements where the provision of public goods and rescue efforts during possible disasters can be carried out promptly and easily.

11. Conclusion

I am not presuming that all desirable changes in society can be brought about through the actions of governments alone. There have to be efforts on the part of the civil society and non-governmental organizations. Though civil society is fairly strong in Kerala, compared to other states in India, and there is a readiness to participate in collective actions at the time of contingency, behavioural and cultural change is necessary to encourage collective action under normal circumstances. Collective action is important for the maintenance of public goods and the environment. The absence or the inadequacy of such civic sense or collective action is visible in the case of solid-waste management. Though there are residents’ associations managing apartment complexes, most of these are stuck with free-riders and non-collaborators. Though Keralites are willing to spend a substantial amount of money on private facilities (like independent houses), their willingness to contribute to public goods does not seem to have gone up significantly. There is a need for social change to address all these challenges.

AUTHOR

V Santhakumar, Professor, Azim Premji University