Kerala - Economy
Kerala is the 10th largest economy in India and contributes around 4.2% of India’s GDP. Its GSDP growth rate was around 7.4% at constant price in 2016-17. State has one of the highest per capita GSDP and per capita income. In the absence of a substantive pick up in agriculture and manufacturing, the Kerala economy is largely supported by a booming service sector. The high wages (above national average) (both male and female field labour) has a bearing on cultivation and other economic activities.
Production of pepper and natural rubber in Kerala contributes significantly to the total national output. In the agricultural sector, coconut, tea, coffee, cashew and spices are important. Spices grown in Kerala include pepper, clove, cardamom (small), nutmeg, mace, cinnamon, cassia and vanilla. Kerala's coastline extends for 595 kilometres. It experiences the humid equatorial tropic climate and is still referred as 'Garden of Spices' or 'Spice Garden of India'. Kochi based Coconut Development Board is playing a significant role in making India a global leader in coconut production and Spices Board India in spice trade.
Historical records cite that the spice trade Kerala had with Babylon and Egypt were centuries old. Some 2000 years back, among the spices that crossed the seas; Cinnamon from Kerala was used in embalming the dead bodies of the Pharaohs and in the manufacture of perfumes and holy oils. Cinnamon from Kerala first found its way to the Middle-East through the Arabs. If pepper and cinnamon attracted seafarers in hordes at one stage in the history of Kerala, the cardamom of Malabar too caught their attention and through them the rest of the world. Cardamom from Kerala is still a much sought after commodity in the West. Rightly called as the 'Queen of Spices' cardamom is one of the most exotic and highly prized spices.
NRI remittances have a major role to play in Kerala’s economy. Emigration and emigrant’s remittances continue to sustain much of the Kerala economy. Other activities in the State, particularly, in the fields of trade, real estate, and construction are also weakened by any decline in foreign remittances. Kerala has been one of the most developed and progressive states in terms of development indicators like poverty ratio, health parameters, education parameters as well as per capita income. Kerala scores better in almost all aspects vis-à-vis national averages.
In 1986, the Government of Kerala declared tourism an important industry and it was the first state in India to do so. Kerala is an important tourist destination: attractive wildlife sanctuaries at Thekkady on the banks of river Periyar, at Parambikulam in Palakkad district and at Mananthavady, Sulthan Batheri and at Wayanad, seaside resort at Kovalam. Padmanabhaswami temple in Thiruvananthapuram is an exquisite specimen of South Indian architecture. Sabarimala temple of Lord Ayyappa is a famous pilgrim tourist centre in Pathanamthitta district. Thiruvananthapuram, the capital, is an abode of temples, mosques and churches. Veli lagoon, Neyyardam and Ponmudi the famous hill stations are the other tourist centres in and around Thiruvananthapuram. Veli provides boat ride facilities. Kalady the birth place of Adi Sankara, Lord Krishna Temple at Guruvayoor, Backel beach (Kasaragode), Malampuzha at Palakkad, Pookkode lake, Kurvadeweep, Pakshipathalam and Edakkal caves in Waynad are notable tourist centers. The famous Kathakali centre, Kalamandalam in Thrissur district is a place of interest for lovers of performing arts.
Agriculture is the main occupation of the people. Nearly half of the population depend upon agriculture for their livelihood. A unique feature of the State is the predominance of cash crops. Kerala is a major producer of coconut, rubber, pepper, cardamom, ginger, cocoa, cashew, arecanut, coffee and tea. Spices like nutmeg, cinnamon, cloves, etc., are also cultivated. Coconut is the most important cash crop of Kerala. Pepper earns the maximum foreign exchange. Banana, pineapple, mango and jackfruit are major fruit crops. Rice and tapioca are important food crops. Tapioca is generally consumed locally but some of it goes to feed the starch factories and mills manufacturing tapioca flour. Kerala is not self-sufficient in food. The total area under cultivation has increased in respect of coconut, rubber, pepper and turmeric. However, crops like cashewnut, banana, groundnut and sesamum have lost their coverage in area.
The state has a very good industrial potential because of good infrastructural facilities like hydro-power, transport system and availability of forest-based and mine-based rare minerals. Traditional industries are handloom, cashew, coir and handicrafts. Other important industries are rubber, tea, ceramics, electric and electronic appliances, telephone cables, transformers, bricks and tiles, drugs and chemicals, general engineering, plywood splints and veneers, Beedi and cigar, soaps, oils, fertilizers and Khadi and village industry products. A number of manufacturing units have also sprung-up for production of precision instruments, machine tools, petroleum and petroleum products, paints, pulp paper, newsprint, glass and non-ferrous metals. Principal export products are cashewnut, tea, coffee, spices, lemongrass oil, sea foods, rose wood and coir.
The State has an abundance of important minerals like ilmenite, rutile, monazite, zircon, sillimanite, clay and quartz sand.
The irrigation system in Kerala is serviced through major, medium and minor irrigation as well as ground water and command area development programmes. In the field of irrigation, the major schemes are Chalakkudy, Peechi, Malampuzha, Gayatri, Walayar, Vazhani, Neyyar, Pamba, Periyar, Mangalam, Chimmini and Cheerakuzhy. Several other irrigation schemes have been commissioned Construction works of seven major irrigation projects - Kallada, Pazhassi, Muvattupuzha, Idamalayar, Karappara- Kuriarkutty, Chaliar and Kanjirappuzha are in progress.
Kerala's power projects are mostly hydro-based because of heavy rainfall and a large number of swift flowing rivers.To meet the fast growing energy requirements, the Government has decided to introduce alternative power generating systems. Peppara hydel power project with a capacity of three MW has commissioned. The work of first stage of diesel power station, Brahmapuram is nearing completion. The Kerala State Electricity Board wholly controls the power generation and distribution in the State. Agency for Non-conventional Energy and Rural Technology (ANERT) acts as a nodal agency for the non-conventional source of energy in the State.
Adequate transport facilities exist in Kerala lowlands. In all other areas network of transport is thin due to several bottlenecks like absence of bridges, weak culverts, narrow width and tortuous alignments etc. There are three airports, viz., Thiruvananthapuram, Kochi (Nedumbassery) and Kozhikode of which the first two are international airports. Among 18 ports, Kochi is the only major port in the state. There are three intermediate ports and 14 minor ports.
Kerala's economy has faced a number of setbacks in recent years. The State had been hit by Cyclone Ockhi in 2017, and by severe floods resulting from unusually heavy rains in 2018 and again in 2019. The economic crisis in the Gulf countries adversely affected Kerala economy, with a number of emigrant workers returning to the State and with a slowdown in remittance flows. Despite such setbacks, GSVA in Kerala grew at the rates of 6.8 per cent and 7.5 per cent respectively in 2017-18 and 2018-19.
The growth of value added in Kerala had been fast in trade and repair services and in hotels and restaurants. These service sectors together registered rates of growth of 13.3 per cent and 7.0 per cent respectively in 2017-18 and 2018-19. Fast rates of value added growth were recorded also in professional services, public administration, social services and other services. To sum up, Kerala's GSVA grew at relatively fast rates during the period from 2016-17 to 2018-19 despite the many setbacks faced by the State and despite the growing signs of recession in the national economy. The sectors that contributed to this fast growth are fishing and aquaculture, manufacturing, trade, hotels and restaurants, social services mainly education and health, public services and professional services.
Food crops comprising rice, tapioca and pulses accounted for 10.15 per cent of the total cropped area in 2018-19 while cash crops (cashew, rubber, pepper, coconut, cardamom, tea and coffee) constituted 62.1 per cent. The area under crops like rubber, coffee, tea and cardamom was 27.7 per cent of the total cropped area. The key initiatives undertaken by the Department of Agriculture in 2019-20 for the improvement of agricultural sector included integrated food crop production programme focusing on increasing rice production and self-sufficiency in vegetable production, holistic development of coconut sector through Keragramams, production and distribution of quality planting materials, and comprehensive fallow land cultivation with people's participation.
The manufacturing sector in Kerala is relatively small in size. The manufacturing sector accounted for a share of only 12.8 per cent of Kerala's GSVA (at constant 2011-12 prices) and 11.8 per cent of total employment in the State in 2017-18.1 In comparison, the manufacturing sector accounted for 18.0 per cent of India's and 29.3 per cent of China's GDP in 2017. At the same time, it needs to be highlighted that there has been a steady increase in the size of Kerala's manufacturing sector, in value terms, especially so over the last four years. The share of manufacturing in Kerala's GSVA increased from 9.8 per cent in 2014-15 to 13.2 per cent in 2018-19. Kerala is the first State in the country to attain 100 percent house hold electrification. Electricity is being provided throughout the State 24x 7 x 365 without any power cut or load shedding. But Kerala, a power surplus State till late 1980s, only generated 30.49 percent of its power requirement in 2018-19. Of the balance requirement, 68.63 percent of the power requirement was met from outside through power purchases, while open access consumers constitute the rest 0.88 percent.
Migration has played a significant role in Kerala economy. Migratory tendencies have been inherent in the context of Kerala, and it has been shaping the economic and social dimensions of the State. The economic boom within the Gulf countries gave migration a considerable boost, reaching its peak in terms of both numbers and remittances. Ironically, Kerala, of late, is witnessing a reverse migration of labor.
As predicted in 2013, the Kerala Migration Survey showed a decline in emigration. The total number of emigrants in 2013 was 24 lakh and it reduced to 21 lakh in the year 2018. This recorded a decrease of around 12 per cent from 2013 to 2018. According to Kerala migration surveys, about 90 per cent of Kerala migrants leave for the Gulf for temporary contract employment and the Gulf does not provide citizenship and all of them have to return back to Kerala once their contract expires. The number of return emigrants estimated by KMS 2018 is 12.95 lakh, about 60 per cent of the number of emigrants. KMS 2018 has confirmed the trend that was observed in the last round – that emigration from Kerala is falling and return migration is on the rise. The long history of migration from Kerala to the Gulf is in its last phase. However, remittances to the State have increased. This is due to the fact that Keralites in the gulf have climbed the social ladder and are earning higher wages, allowing them to remit more.
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