Thiruvananthapuram: The invitation extended to economist Thomas Piketty to Kerala and the lilsting of KIIFB (Kerala Infrastructure Investment Fund Board) Masala Bonds in London Stock Exchange (LSE) has caused some controversy. The criticism, including those from left quarters, are in effect a denunciation of following market-friendly policies and embracing neo-liberal economics.
Chief minister Pinarayi Vijayan directly invited the French economist Thomas Piketty to Kerala to study the Kerala development model, which the latter accepted. This has been perceived as a clear indication of adopting an economic policy that carries no element of Marxism, especially when Kerala is entering dire economic crisis. This is read with the KIIFB's bonds being listed in LSE, which was celebrated by the CPM's organ.
Remittances from the Gulf-based non-resident Keralites, which forms a third of the state's revenues, is dwindling. Owing to the widening gap between income and expenditure, the public debt of Kerala is increasing every year. Thomas Piketty is an author who has publicly declared that he is neither a Marxist nor has he read Marx's 'Das Kapital'. Piketty's discourse is mostly about how the capitalist crisis, especially in terms of wealth disparity, can be tided over.
The charge against Pinarayi is that he is using Piketty as a smokescreen to implement the neo-liberal economic policies being followed under CPM leadership in Kerala. Piketty's main thesis is that in order to end wealth inequality, those with higher wealth should be subjected to higher taxes. But Marxist thinkers share the reading that Piketty does not address the essence of capitalism which is the root cause of economic equality.
The listing of KIIFB's masala bonds in LSE happened while experts were debating the high interest rate of the bond. KIIFB has been cited as a clear example of the means employed by governments to raise capital that results in making economy market-centric. KIIFB envisages public sector and joint sector enterprises and also projects with public-private-participation too.
And such projects follow the practice of charging from the public a 'User Fee' or levy. The finance minister has declared additional motor vehicles tax and the cess on petroleum products as the main sources of KIIFB's repayments. But there is also the provision that if this becomes unworkable, budgetary allocations will be used. And there lies the rub; for the concern is that this in future will lead to crash of the economy.