High growth and rising inequality in Kerala since the 1980s

Over the last three decades, the state of Kerala in South India has witnessed fast-paced growth, with the highest recorded inequality (in 2009–2010) among all the states in India; however, its human development indicators remain the highest in India. This marks a departure from the well-known development trajectory of Kerala – famously known as the Kerala model – of low growth and moderate inequality with high human development indicators. We conduct GDP and growth decomposition, inequality decomposition and a Marxian class analysis of the National Sample Survey data from Kerala in order to understand these recent phenomena. While the notion that economic liberalization adopted by the state and central governments is the main cause of this new state of affairs is generally valid, we provide a more nuanced account of the causal structures based on class analysis and the impact of outward labour migration to the Persian Gulf.