Dr. T. T. Sreekumar
A recent article by Shashi Tharoor, Congress MP and former Minister, “Changing Kerala: Lumbering Jumbo to a Lithe Tiger” (Indian Express, 14 Feb 2025), has sparked considerable controversy. Despite the critical reception, Tharoor has defended his arguments, suggesting that any potential errors could be addressed in future pieces if pointed out. This note, however, does not focus on the contentious aspects of his article. Rather, it serves as an entry point to consider the unique crises faced by regional governments, such as Kerala, when they uncritically embrace the neoliberal model in their pursuit of increased capital investment. Tharoor’s analysis of Kerala, however, appears problematic, as it does not adequately situate the state within a broader comparative framework. By failing to engage with a broader statistical context, his argument indulges in a somewhat exaggerated and overly simplistic logic, marked by statistical errors and under-researched observations. Such an approach inevitably neglects fundamental analytical frameworks that are crucial for a well-rounded and contextually grounded analysis of Kerala’s Start-up ecosystem’s development trajectory in relation to other states and the broader global economic conditions.
Tharoor asserts that “Kerala has forged a startup ecosystem that, at the end of an 18-month period last year, was valued at a whopping $1.7 billion, five times more than the global average during this same period.” As I read this statement from Telangana, I am compelled to question the use of the term “whopping” to describe Kerala’s $1.7 billion ecosystem, especially when we consider the significantly larger values of other states in Southern India—Telangana at $8.3 billion, Tamil Nadu at $27.4 billion, not to mention Karnataka with an overwhelmingly impressive $158 billion. They are all opposition-led UPA governments, with two of them being Congress-led governments within the UPA coalition. If Kerala’s $1.7 billion is deemed “whopping,” then one must wonder how these other states’ ecosystems should be characterized. While such language may be intended as hyperbolic praise for Kerala’s efforts, it reveals a fundamental flaw in Tharoor’s argument, particularly regarding his claim about the global average. The report he references — The Global Startup Report 2024— consistently indicates that the global average startup ecosystem value is $29.4 billion. If Kerala’s ecosystem is indeed five times the global average, then this would imply that the global average startup ecosystem value is far lower than reported. Furthermore, it should be evident that Kerala’s $1.7 billion ecosystem value, the smallest in South India, cannot possibly be five times the global average, as Tharoor suggests, without undermining the statistical credibility of his comparison.
Similarly, Tharoor claims that between July 1, 2021, and December 31, 2023, “while the worldwide average growth was 46 percent, Kerala recorded a staggering 254 percent compound annual growth rate,” which he lauds as “a phenomenal feat.” However, he seems to overlook a crucial statistical principle: high percentage growth rates can often occur when the base year value used to calculate growth is exceptionally low, as was the case with Kerala. In the preceding period, Kerala’s growth rate was 243%. This suggests that despite nearly three consecutive years of high growth rates, Kerala remains at the lowest level in South India. As indicated in the table, Kerala’s growth, while impressive in percentage terms, still fails to surpass other South Indian states. This points to a deeper structural issue—despite the two major political alliances, UDF and LDF, competing to implement neoliberal policies over the past two to three decades, Kerala continues to be overlooked by global and domestic capital. The state’s challenges cannot be addressed by focusing solely on current growth rates but require a more comprehensive understanding of the broader structural dynamics at play.
It is essential to recognize that the neo-industrialization of emerging markets is not merely a matter of how effectively a region implements neoliberal governance. Rather, it is intrinsically linked to the interests of global capital, its geopolitical dynamics, and its potential for aiding accumulation. This broader structural context must be considered when evaluating the economic trajectory of regions like Kerala. According to the Global Startup Report, Kerala significantly lags behind other Indian states across all relevant indicators. The attached list, based on data from the report, highlights this disparity. Notably, the report identifies the top 40 global startup hubs in Asia, which include prominent Indian cities such as Bengaluru, Delhi, Mumbai, Pune, Chennai, and Hyderabad. In stark contrast, Kochi—home to approximately 87% of Kerala’s startup hubs according to the Report—faces little prospect of joining this esteemed list in the current scenario. This suggests that despite the region’s neoliberal policies, Kerala remains marginal in the broader landscape of global startup ecosystems, primarily due to the structural forces of global capital and geopolitical considerations that shape investment and growth in the region.
One of the most striking issues highlighted by the report is the persistently low wages in Kerala, which significantly affect its competitiveness in the knowledge economy. The average salary of software engineers in Kerala, as presented in the report, is calculated by converting the data into rupees at the current exchange rate. This raises an important question: Are highly skilled engineers willing to work in Kerala for half the salary they could earn in other states? In the context of the neoliberal knowledge economy, where talent is a central productive force, this wage disparity poses a considerable challenge to Kerala’s growth prospects. According to the 2021 report, the average salary for a software engineer in Kerala was Rs 48,000, but this figure has since dropped to Rs 42,500, further compounding the state’s difficulties.
In addition to wage issues, the report highlights that Kerala lags behind its South Indian counterparts in terms of both the exit count and exit value of startups. This suggests that the chances of Kerala achieving a breakthrough in its current state are minimal. The creation of hype around neoliberal initiatives, such as the “ease of doing business,” may have some peripheral impact but is unlikely to lead to substantial change. For instance, the promise of issuing licenses in just three days for startups might seem advantageous at first glance, but in reality, it is a disadvantage. This is not simply about reducing bureaucratic delays; rather, it is about ensuring that all necessary checks are conducted thoroughly and promptly. In contrast, Singapore, which ranks among the top ten global startup ecosystems, takes anywhere from two weeks to two months to process initial stages of licensing. The common critique of the so-called “license raj” often echoes neoliberal rhetoric, which serves to morally pressure the political leadership of developing economies. Such rhetoric overlooks the importance of proper regulatory oversight, which is crucial for fostering sustainable economic growth and safeguarding public interests.
Capital operates as a global system with a clear and strategic vision for directing its flows across national borders. Over the past several decades, it has become an undeniable force, exerting considerable political power to influence and reshape the economic policies of developing countries, including India. This power has been instrumental in pressuring many nations to amend their constitutions, often in the pursuit of creating new avenues for profit generation. The formation of the World Trade Organization (WTO) and the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) exemplify this trend, as they required member countries to amend their constitutional and legal frameworks in order to align with WTO agreements. These included regulations on intellectual property (TRIPS), services liberalization (GATS), dispute resolution mechanisms (DSU), agricultural reforms (AoA), customs procedures (TFA), anti-dumping measures, countervailing duties, binding tariff commitments, and broader trade liberalization. In this context, capital has largely ignored the social and political struggles that arose in response to these changes. For instance, the dismantling of license restrictions and the systematic erosion of labour laws triggered significant civil society and working-class resistance. However, capital has largely disregarded these struggles, focusing instead on securing its own interests and advancing its agenda of profit maximization. This indifference to the negative consequences of neoliberal reforms on labour and society underscores the broader dynamics of global capitalism, which prioritizes economic growth and market liberalization over the welfare of marginalized communities and the protection of labour rights.
Nonetheless, when regional and national governments host investors’ summits, large corporations often make grandiose announcements as part of their public relations strategies. For instance, the 2020 Ascend Meet organized by the Kerala government saw the bold proclamation of an impending investment of Rs. 1 lakh crore, with Rs. 66,300 crores of this amount attributed to the Abu Dhabi Investment Authority (ADIA). However, there was little critical examination of the outcomes of previous investment promises or the actual creation of jobs that were supposedly tied to these investments. Similarly, the most recent Investment Meet, held just last week, announced another Rs. 1.5 lakh crore in investments, yet again without offering clear protocols or accountability measures to ensure that these promises will be fulfilled. This pattern suggests that capital is leveraging these summits to enhance its public image while making commitments that often fail to materialize. In essence, Kerala is being taken for a ride, with these high-profile investment announcements serving more as corporate publicity stunts than genuine efforts to address the state’s economic challenges, while the aim of successive governments in organizing such summits is to leverage neo-liberal development, despite the often-superficial nature of these promises. The lack of transparency and follow-through on these promises raises serious questions about the long-term efficacy of such neoliberal strategies.
Ostensibly, to align itself with the leading states, Kerala must attract significant inflows of global capital, while simultaneously increasing productivity and wages. However, if we critically assess the global dynamics of capital, it becomes clear that regional governance protocols play a relatively insignificant role in this process. The primary factors driving investment and growth are structural and market-driven, rather than the direct influence of local policies and aspirations. Nevertheless, it is crucial to establish benchmarks to guide this process. For instance, a realistic assessment of how many years it will take for Kerala to catch up with states like Telangana, along with a strategic plan to achieve this, would provide a clearer roadmap for progress. In the era of S.M. Krishna’s leadership, Karnataka viewed cities like Singapore and Kuala Lumpur as benchmarks for development. In the public and cultural imagination, Bengaluru was even projected to become a counterpart to cities like New York and Silicon Valley. Benchmarking such aspirations is not only an inevitable exercise but also a necessary one, as it would lend greater concreteness and credibility to the state’s development efforts, offering a tangible reference point against which progress can be measured within its rigid neoliberal framework.
Another crucial aspect to consider is that Kerala has been one of the major labour-export regions within the global economic order, particularly to the Gulf Cooperation Council (GCC) countries. The recent decision by the Kerala government to allow the establishment of private and foreign universities further reinforces this reality. It is often noted that this initiative, originally proposed by the UDF 15 years ago, was allegedly thwarted by opposition from the LDF. Whether it is 15 years ago or now, Kerala’s destiny seems to remain tied to its role as a source of skilled and semi-skilled labour for global markets. The expansion of this trend is evident in the increasing numbers of young people from Kerala seeking education abroad, with many heading to countries like Canada, Australia, Europe, and the United States in search of better opportunities. This outflow of talent is a structural feature of the global economy that poses a significant challenge to Kerala’s political leadership, particularly as they navigate the complexities of embracing neoliberal economic development. Despite the state’s efforts to explore neoliberal policies, the larger structural forces of labour migration, coupled with global economic processes and capital’s preference to other states rather than Kerala that continue to shape the state’s future in ways that are beyond the control of local governance. These patterns highlight the deeper systemic issues that need to be addressed if Kerala is to shift from being a mere labour exporter to a hub of sustainable economic and educational development.
[This is a slightly revised standalone article by the author, which was originally published in Malayalam in his fortnightly column ‘Nalamkannu’ in Madhyamam daily.]
Dr. T.T. Sreekumar is a Professor at the English and Foreign Languages University (EFL University), Hyderabad, where he also serves as the Director (i/c) of the Educational Multimedia Research Centre (EMRC). A bilingual writer and editor in English and Malayalam, he has made significant contributions to both academic and literary spheres. His book ‘ICTs & Development in India: Perspectives on the Rural Network Society’ explores the intersection of technology and rural development. In Malayalam, he has authored and edited over 20 books, alongside publishing more than 600 articles. His widely read fortnightly column, Nalaam Kannu, in Madhyamam Daily, has garnered a dedicated readership. Recognized for his literary achievements, Dr. Sreekumar received the CB Kumar Endowment Award from the Kerala Sahitya Academy in 2021.
