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Kerala

Economy

Kerala Economy is experiencing a slow recovery from a long slump. In the 1970s and 80's the economy was relatively stagnant, where as in nineties, the state economy experience a significant growth rate (5.99%) with enhanced performance of secondary and territory sectors.

With the economic growth of the nineties the per capita income has gone beyond the national average for the first time. It was in the late 1990s that there was a growth boom in the transport, communication as well as in trade and hotels which add to the growth rate of the service sector in Kerala.

As per the latest figures the per capita state income at constant prices (1999-2000) increased from Rs. 25,657 in 2005-06 to Rs. 27,284 in 2006-07 recording a 6.3 percent growth. It is also to be noted that the per capita state income is still higher (Rs. 27,284) than the national income of Rs. 22,483. The growth rate of Gross State Domestic Product (GSDP) was 8.1 percent in 2006-07. At current prices the GSDP is estimated at Rs. 1,32,738.53 crore (quick estimate) during 2006-07, where as at current prices it is 11.6 percent in 2006-07 compared to 11.2 percent in 2005-06.

The sectoral share of territory sector, which is growing fast, and its contribution to the GSDP at constant prices (1999-2000) constitutes 60.6 % and at current prices it was 61.3 % whereas, the contribution from agriculture (primary sector) is decreasing at 17.8% in 2006-07 (constant prices) and 16.5% at current prices. The secondary sector remains almost stagnant of about 22 percent only.

Sector wise Annual Growth Rate of GSDP - Kerala
Industry Origin Percentage change over Previous Year
At Current Prices At Constant (1999-2000) Prices
2004-05 2005-06(P) 2006-07(Q) 2004-05 2005-06(P) 2006-07(Q)
Agriculture & Allied Activities 8.4 9.8 9.9 7.4 6.6 5.9
Forestry & Logging -12.2 0 -1.4 15.4 0 8.1
Fishing 21.7 36.8 6.5 -0.6 -4.3 5.5
Mining & Quarrying -2.1 0 -1.0 -5.6 0 -2.8
Primary Sector 7.7 11.7 8.7 7.2 4.9 6.0
Manufacturing 11.5 11.8 12.1 4.8 5.5 5.7
Electricity, Gas & Water Supply -1.5 9.2 4.5 -7.3 3.0 -1.6
Construction 14.4 14.6 14.5 10.8 12.5 11.7
Secondary Sector 11.6 13.0 12.6 6.5 8.9 8.3
Transport, Storage & Communication 22.5 15.8 19.2 17.7 15.0 16.5
Trade, Hotels & Restaurants 5.1 7.0 6.0 2.7 3.2 2.9
Banking,Insurance & Real Estate 1.5 14.0 7.7 9.5 10.5 10.0
Real Estate ownership Business, legal 15.1 12.5 13.8 1.9 11.0 6.5
Public Administration and other services 33.3 8.2 20.7 30.2 7.4 18.8
Other Services 14.8 8.2 11.5 9.2 1.5 5.3
Tertiary Sector 12.6 10.4 12.0 8.8 7.5 8.7
GSDP 11.5 11.2 11.6 8.0 7.3 8.1

Source : Department of Economics & Statistics

P : Provisional, Q : Quick Estimate

District wise analysis showed that, 'Ernakulam district' topped in the three aspects of Kerala economy. The district has the highest growth rate of per capita income, per capita income and GSDP. With regard to GSDP the district has the highest income of Rs. 18,729.37 crore in 2006-07 registering the growth rate of 12.1 percent than the previous year. The same district stands first with the per capita income of Rs. 39,034 at constant (1999-2000) prices in 2006-07 as against Rs. 36,520 in 2005-06. The highest rate of growth of per capita income at constant (1999-2000) prices of 6.9 percent was also recorded in Ernakulam district in 2006-07 followed by Pathanamthitta (6.8 percent) and Thiruvananthapuram (6.7 percent) districts. Ernakulam district also holds the position of having the major portion of the income from secondary sector. (Rs. 5337.17 crore) leaving behind Thiruvananthapuram (Rs. 2729.50 crore) and Thrissur (Rs. 2327.67 crore) districts.

District - wise Distribution of Gross State Domestic Product
District Gross State Domestic Product at Factor Cost Growth Rate (%)
At 1999-2000 Prices At Current Prices At 1999-2000 Prices At Current Prices
2005-06(P) 2006-07(Q) 2005-06(P) 2006-07(Q) 2006-07 2006-07
Thiruvananthapuram 10700.46 11675.73 12942.79 14569.67 9.1 12.6
Kollam 7290.88 7880.92 8874.27 9892.94 8.1 11.5
Pathanamthitta 4046.38 4394.93 4702.01 5241.30 8.6 11.5
Alappuzha 6178.80 6679.04 7640.53 8520.48 8.1 11.5
Kottayam 6853.43 7421.73 8171.09 9130.07 8.3 11.7
Idukki 4000.11 4277.91 4570.03 5027.85 6.9 10.0
Eranakulam 13748.73 14913.78 16714.22 18729.37 8.5 12.1
Thrissur 9481.00 10256.77 11461.60 12773.29 8.2 11.4
Palakkad 7478.75 8047.03 9005.00 10023.14 7.6 11.3
Malappuram 7825.27 8425.29 9414.66 10485.37 7.7 11.4
Kozhikode 8459.73 9135.37 10320.27 11487.60 8.0 11.3
Wayanad 2404.47 2576.13 2779.32 3073.05 7.1 10.6
Kannur 7111.94 7667.77 8556.59 9515.27 7.8 11.2
Kasaragod 3237.13 3480.33 3845.80 4269.12 7.5 11.0
GSDP 98817.08 106832.73 118998.19 132738.53 8.1 11.6

Source : Department of Economics & Statistics

P : Provisional, Q : Quick Estimate

Sector wise analysis in GSDP showed that the highest contribution from primary sector falls in the Idukki district of Rs. 1,883.88 crore (2006-07) followed by Malappuram (Rs. 1,871.71 crore) and Kollam (Rs. 1,585.74 crore) at constant prices respectively.

Viewed from a long-term perspective, however it is the territory sector that stands out with the highest growth and the primary sector does not hold the promise of propelling higher growth rate for the economy. Thus, the analysis both in terms of rate of growth and sectors share of GSDP, the tertiary sector has dominated, pointing the fact that Kerala has certainly moved towards a non-agricultural economy. Still it is important for the State to increase production in real sectors of the economy such as agriculture and industry.

The global financial recession has started affecting the economy of Kerala, with a fall in rubber price, decrease in exports and decline in job opportunities abroad. The price of natural rubber (1 kg) has dropped from Rs. 140 to around Rs. 80. Market leaders in the State's spices, cashew export sector as well as tourism are also reasonably apprehensive about the global economic contraction. Above all, the effects of the global financial and economic crisis have already had its toll on the information technology (IT) sector in Kerala. If the IT sector in the state slows down, the state might face a lot of problems with unemployment, because the category of people being employed in the IT sector in Kerala might not easily find employment with salaries similar to their current pay cheques.

Thus, in order to shape Kerala to a new model of development based on faster economic growth with distributive justice the State government has been giving equal importance to the traditional sectors like agriculture, education, health and other services as well as the emerging the sectors like tourism and Information Technology.

Courtesy : Economic Review 2007, published by Kerala State Planning Board

Human Development Report 2005, published by Centre for Development Studies, Thiruvananthapuram.

Convalescence thoughts for Kerala Economy, Kerala Calling - M. Shyame Meher

Source: IT Department, Government of Kerala