Monday, August 9, 2010

The grand lottery loot

BRP Bhaskar
Gulf Today

Kerala now has the highest per capita income as well as expenditure in India. High-rise buildings and bustling shopping centres strewn all over the state are visible symbols of its prosperity

Official figures never reflected the state’s financial health fully and correctly. Academics were able to inject a measure of realism in statistics relating to income. However, there is no proper understanding of where the money goes.

After a long period of hand-to-mouth existence, the state’s fortunes turned as jobseekers started migrating in droves to the Gulf States in the wake of the oil boom of the 1970s. The savings they sent home boosted the state’s economy.

Since money flowing into banks from abroad did not figure in the government’s books, the state remained below the national average in income tables. Scholars at the Centre for Development Studies, Thiruvananthapuram, helped correct the picture by working Gulf remittances into the tables.

In the net state domestic product (NSDP) table Kerala is still at the ninth place among 22 states. In the per capita table, it ranks higher — at the sixth place. The NSDP includes income of non-profit institutions too. The Consumer Pyramid constructed by the Centre for Monitoring Indian Economy (CMIE), which presents a realistic picture of family income, placed the state first with a per capita household income of Rs63,000 in 2009, way ahead of Delhi (Rs55,000) and Punjab (Rs42,000), the other big earners.

Gulf remittances, which were around Rs3 billion a year in the late 1970s, have now grown to about Rs300 billion a year. Banking statistics indicate that domestic savings add up to almost as high a figure as non-resident deposits.

How much of the money that flows in from outside and is generated locally goes into construction and conspicuous consumption? There is no ready answer to this question.

The Kerala Sastra Sahitya Parishad, which conducted a survey a few years ago to find out how Kerala lives, estimated that each year the people of the state spent about Rs68 billion on marriages and Rs28 billion on medical treatment. The figures it rolled out leave a wide gap between income and expenditure.

There is no reliable estimate of consumer spending in the state. Each year the government conducts a Grand Kerala Shopping Festival with the active cooperation of commercial interests. It claims the festival is a great success but does not divulge any sales figures.

Jewellers are among the government’s major partners in the shopping festival. India, with a sales turnover of 900 tonnes, is the biggest consumer of gold in the world. Kerala, which accounts for less than four per cent of the country’s population, accounts for 25 per cent of the gold sales.

The huge turnover of the jewellers, unofficially estimated at hundreds of billions of rupees, is not reflected in the sales tax figures. Last year the government managed to push up sales tax revenue from Rs1.5 billion to Rs1.8 billion.

Kerala tops in per capita liquor consumption. The Kerala State Beverages Corporation, which has a monopoly over sale of Indian-made foreign liquor, reported a record turnover of Rs55.39 billion in 2009-10. This was 20% more than the previous year’s figure.

The biggest beneficiary of the spurt in liquor sales was the state government. The KSBC contributed Rs42.60 billion to the exchequer by way of sales tax, excise duties, licence fees and other levies last year.

Kerala also tops in the consumption of tobacco. According to the National Sample Survey Organisation, per capita monthly expenditure on tobacco products in the state was Rs.14.50 in the villages and Rs18.50 in the urban areas. The national average for both urban and rural areas was only Rs9.90.

The expenditure story will not be complete until we look at the loot by the lotteries.

Kerala pioneered the system of state lotteries. In 1967, the first year of operation, the state Lotteries department sold tickets worth Rs2 million and made a profit of Rs1.4 million. Over the past four decades, sales have risen to Rs4.84 billion and profit to Rs1.04 billion.

The state Lottery department has now been put in the shade by lotteries operated by private agencies under licences issued by the Sikkim state and the neighbouring country of Bhutan. They take away much more money than the state government.

Based on data relating to tickets printed and sold in the state by private lottery agencies, Mathrubhumi, a leading newspaper, reported last week that they are siphoning off about Rs157 billion from the state each year.

Apparently a large number of poor people in the state today pin their hopes for a better future not on the state government but on the governments of Sikkim and Bhutan whose agents have lured them with schemes that provide for several draws each day.

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