Economy of Kerala

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Economy of Kerala
Technopark Trivandum Ganga and Yamuna Buildings.jpg
GDP 7.73 lakh crore (US$120 billion) (2018-19 est.)[1]
GDP rank 8th
GDP growth
7.4% (2016-17)[1]
GDP per capita
$2,140 [2]
GDP per capita rank
GDP by sector
Agriculture 11.3%
Industry 25.6%
Services 63.1% (2017)[1]
Unemployment 12.5% (2017)[1]
Public finances
30.7% of GSDP (2018-19 est.)[1]
Revenues 1.03 lakh crore (US$16 billion) (2018-19 est.)[1]
Expenses 1.27 lakh crore (US$19 billion) (2018-19 est.)[1]

Kerala has the eight largest economy in India. Service industry dominates the Kerala economy. Kerala's per capita GDP in 2013-14 is Rs. 103820.[3] Kerala's High GDP and productivity figures with higher development figures is often dubbed the "Kerala Phenomenon" or the "Kerala Model" of development by economists, political scientists, and sociologists. This phenomenon arises mainly from Kerala's land reforms, social upliftment of entire communities implemented by various governments ruled the state.[4] Some describe Kerala's economy as a "democratic socialist welfare state". Some, such as Financial Express, use the term "Money Order Economy".[5] Kerala's economic progress is above the national average, with numerous major corporations and manufacturing plants being headquartered in Kerala, specifically at Technopark, Trivandrum. Estimates of the 2013 Tendulkar Committee Report on poverty suggest that percentages of population below poverty line in rural and urban Kerala are 9.14% and 4.97%

Around 3,000,000 Keralites are working abroad, mainly in Persian Gulf; to where migration started with the Gulf Boom. The Kerala Economy is therefore largely dependent on trade in services and resulted remittances.[6][7][8] In 2012, the state was the highest receiver of overall remittances to India which stood at Rs.49,965 Crore (31.2% of the State's GDP), followed by Tamil Nadu, Punjab and Uttar Pradesh.[9] S. Irudaya Rajan describes the situation as "Remittances from global capitalism are carrying the whole Kerala economy".[6] With 11.8% of the labour force unemployed in 2015, Kerala is 11th in unemployment in India.[10] Underemployment, low employability of youths, and a 13.5% female participation rate are chronic issues.[11]:5, 13[12] The 'Report on Fifth Annual Employment - Unemployment Survey for 2015-16' prepared by the labour bureau of the Union ministry of labour and employment indicates that Tripura had the highest unemployment rate of 19.7% in India, followed by Sikkim (18.1%) and Kerala (12.5%).

Macro-economic trend

This is a chart of trend of gross state domestic product of Kerala at market prices estimated by Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees.Kerala had recorded a growth rate of 6.49 per cent in 2013, which was above the national average (4.04) and the second highest among South Indian States. The state’s growth rate was above that of Karnataka (5.79 per cent) and Andhra Pradesh (5.97 per cent).

Year Gross State Domestic Product
1980 42,860
1985 75,200
1990 140,980
1995 387,620
2000 697,920
2005 1,025,080[13]

The state's debt was estimated at 29.53 per cent of GDP in 2013.[14] State's debt liability recorded an increase of 14.4 per cent and rose from Rs 1,24,081 crore in 2013-14 to Rs 1,41,947 crore in 2014-15. This liability as a percentage of GSDP was 31.4 per cent, which is higher than the target of 29.8 per cent fixed in the Kerala Fiscal Responsibility Act.[15] The GDP growth rate that continuously stood above the national average, began to show a declining trend from 2012-13, and it further slid to 8.59% in 2015-16, when the national average stood at 9.94%.The tax growth rate, which was 23.24% in 2010-11, fell to 10.68% in 2015-16.[16]


The countryside of Wayanad.

Kerala produces 97% of national output of pepper and accounts for 85% of the area under natural rubber in the country.[17] Coconut, tea, coffee, cashew, and spices — including cardamom, vanilla, cinnamon, and nutmeg — comprise a critical agricultural sector. A key agricultural staple is rice, with some six hundred varieties grown in Kerala's extensive paddy fields.[18] Nevertheless, home gardens comprise a significant portion of the agricultural sector. Related animal husbandry is also important, and is touted by proponents as a means of alleviating rural poverty and unemployment among women, the marginalised, and the landless. Feeding, milking, breeding, management, health care, and concomitant micro-enterprises all provide work for around 3.2 million of Kerala's 5.5 million households.[citation needed] The state government seeks to promote such activity via educational campaigns and the development of new cattle breeds such as Sunandini.

The most essential or the staple crop is the rice or paddy. About 600 varieties of rice are grown in the sprawling paddy fields of Kerala. In fact the Kuttanad region of the district of Kerala is known as the 'rice bowl of the state' and enjoys a significant status in the production of rice.

Next to rice is Tapioca and is cultivated mainly in the drier regions. Tapioca is a major food of the Keralites. Besides production of the main crop, Kerala is also a major producer of spices that form the cash crops of the state.The important spices are cardamom, cinnamon, clove, turmeric, nutmeg and vanilla.

Other cash crops that constitute the agricultural sector include tea, coffee cashew, pulses, areca nut, ginger and coconut. In fact coconut provides the principal source of income in Kerala- from coir industry to coconut shell artifacts. Cashew is also an essential cash crop. Kottayam district has extensive areas producing and processing rubber. Apart from rubber, other plantation crop likes plantains or bananas are also grown in plenty.

National Sample Survey Organization (NSSO) conducted a Situation Assessment Survey in 2013. According to their data, as opposed to 57.8% of national households declaring themselves as agricultural, 27.3% did so in Kerala. And of those households in Kerala, nearly two-thirds earn income from activities other than agriculture.When statistics sum up the state earns 30 percent of its income from agriculture.

In 1960-61, Kerala contributed to nearly 70% of the country’s coconut production. In 2011-12, it was at 42%. It dropped further by 2.3% points the next year. According to the State Planning Board (2011) data, the state is producing only about 12% of its total requirement for rice. In 1960-61 Kerala produced more than 10 lakh tons of rice. By 2012-13 rice production was down to 5.08 lakh tons. By 2012-13, in just a single year, area under rice cultivation had declined by 5.2%, and the production itself dropped by 10.2%.


Per capita & Consumption of alcoholic beverages in Kerala for the year of 2010

The government enforces state monopoly over liquor sale in the state, after the state banned foreign liquor shops, through the government owned Kerala State Beverages Corporation (KSBC). Every year, liquor sales have been rising and the total sales of liquor and beer during 2010-11 fiscal year was expected to be about Rs. 67 billion.[19]

The government applies the highest state tax on liquor (around 120%). The total revenue from taxes on liquor was Rs. 55.39 billion in 2009-10. Rum and brandy are the preferred drinks in Kerala in a country where whisky outsells every other liquor. Taxes on alcohol was a major source of revenue for the state government, but of late, it has been showing a declining trend. Only 4.2% of revenues for its annual budget come from liquor sales. Revenues from alcohol to the state's exchequer have registered a 100% rise over the past four years.[20]

Liquor sales stood at 201 lakh cases worth Rs.11,577 crore during 2015-16, down from 220 lakh cases worth Rs.10,013 crore during the previous year. Gross sales during the first three months of 2016 were around Rs.4,000 crore.[21]

Numbers from the Kerala State Beverages Corporation analyzed by the Alcohol and Drug Information Center (AIDIC), show that alcohol consumption dropped by 20.27 per cent since April 2014, this in a market that registered an annual growth of 12 per cent to 67 per cent for the last 30 years.[22]


A house Boat View from Vambanad Lake

Kerala is an established tourist destination for both Indians and non-Indians alike. Tourism contributes to nearly 10% of the state's GSDP. Tourists mostly visit, Fort Kochi, Mattanchery, Cherai, Kappad, Kovalam, the hill stations of Munnar, Nelliampathi, Wayanad and Ponmudi, and national parks and wildlife sanctuaries such as Periyar and Eravikulam National Park. The "backwaters" region – an extensive network of interlocking rivers, lakes, and canals that center on Veli, Akkulam, Ashtamudi, Alleppey, Kumarakom, and Punnamada – also see heavy tourist traffic. Examples of Keralite architecture, such as the Padmanabhapuram Palace, Malik Deenar Mosque Kasaragod, Paradesi Synagogue are also visited. Kochi has the highest number of international and domestic tourist arrivals in Kerala. And the major city in kerala known as Kochi, Other cities like Kozhikode (Land of Zamorins) and Alappuzha(called the "Venice of the East") are also popular destinations. Tourism plays an important role in the state's economy. Kerala is also a preferred destination for night dwellers and the nightlife districts in Kochi, Kozhikode, Thrissur, Kottayam and Kollam are the major centres. Along with tourism there is also a new trend of domestic pilgrimage tourism visible in Kerala in recent years during the annual Sabarimala pilgrimage season and round the year to temples such as Padmanabhaswamy Temple Thiruvananthapuram, Guruvayur Temple Thrissur etc.

BSE listed Kerala companies

  1. State Bank of Travancore
  2. Federal Bank
  3. Dhanlaxmi Bank
  4. South Indian Bank
  5. Cochin Minerals and Rutile Limited
  6. Kerala Solvent Extractions Ltd
  7. Manappuram General Finance and Leasing Ltd
  8. Muthoot Finance
  9. Harrisons Malayalam
  10. Accel Transmatic Limited
  11. Geojit BNP Paribas Financial Services Limited
  12. GTN Textiles Limited
  13. Kitex Garments
  14. Nitta Gelatin India Ltd
  15. Eastern Traders
  16. Rubfila International LTD
  17. Kerala Ayurveda Ltd
  18. Vertex Securities Ltd
  19. V-Guard Industries Ltd
  20. Sree Sakthi Paper Mills
  21. AVT Natural Products
  22. Victory Paper and Boards (India) Limited

Foreign remittances

In a state of 32 million where unemployment approaches 20 percent, one out of six employed Keralite now works overseas. As of 2008, the Gulf countries altogether have a Keralite population of more than 2.5 million, who send home annually a sum of USD 9.25 billion,[23] which is more than 15.13% of Remittance to India in 2008. Large numbers work in construction. High literacy allows Keralites to secure administrative employment & white collar jobs. Foreign remittances augment the state's economic output by nearly 25 percent. Migrants' families are three times as likely as those of nonmigrants to live in superior housing, and about twice as likely to have telephones, refrigerators and cars.[24] Pathanamthitta and Thrissur districts have on an average one member from each household a non-resident Indian.

Of the $71 billion in remittances sent to India in 2012, Kerala still received the highest among the states: $11.3 billion, which is nearly 16%.[25]

The survey conducted by the Centre for Development Studies (CDS), Thiruvananthapuram, in 2016 pointed out that foreign remittances in Kerala in 2014 was estimated to be Rs. 71,142 crores which dropped to Rs.63,289 crores in 2016.It is estimated that the state received annual remittances in 2017, amounting to Rs 90,000 crore, which is 35% of the state's income.[26]

According to a study commissioned by the Kerala State Planning Board, the state should look for other reliable sources instead of relying on remittances to finance its expenditure.[27]


Kerala is the single largest originator of education loans for the country as a whole.Total disbursal of education loans amount to Rs. 60 billion.[28]


Kerala has 145,704 km of roads (4.2% of India's total). This translates into about 4.62 km of road per thousand population, compared to an all-India average of 2.59 km. Virtually all of Kerala's villages are connected by road. Traffic in Kerala has been growing at a rate of 10–11% every year, resulting in high traffic and pressure on the roads. Total road length in Kerala increased by 5% between 2003-2004. The road density in Kerala is nearly four times the national average, and is a reflection of Kerala's unique settlement patterns. India's national highway network includes a Kerala-wide total of 1,524 km, which is only 2.6% of the national total. There are eight designated national highways in the state. Upgrading and maintenance of 1,600 km of state highways and major district roads have been taken up under the Kerala State Transport Project (KSTP), which includes the GIS-based Road Information and Management Project (RIMS). Kerala ranks second nationwide in diesel-based thermal electricity generation with national market share of over 21%.


India's largest floating solar power plant set up on the Banasura Sagar reservoir in Wayanad, Kerala. It is the 500 kWp (kilowatt peak) solar plant of the Kerala state electricity board (KSEB) floats on 1.25 acres of water surface of the reservoir. [29]

See also


  1. ^ a b c d e f g "Kerala Budget Analysis 2018-19" (PDF). PRS Legislative Research. Retrieved 3 February 2018. 
  2. ^
  3. ^ "Per Capita Income of Various Indian States [2016]". 17 December 2013. Retrieved 2 April 2018. 
  4. ^
  5. ^ "Cashing out of the money order economy". 
  6. ^ a b Deparle, Jason (7 September 2007). "Jobs Abroad Support 'Model' State in India". New York Times. Retrieved 1 May 2010. 
  7. ^ K.P. Kannan, K.S. Hari (2002). "Kerala's Gulf connection: Emigration, remittances and their macroeconomic impact 1972-2000". 
  8. ^ S Irudaya Rajan, K.C. Zachariah (2007). "Remittances and its impact on the Kerala Economy and Society" (PDF). 
  9. ^ "NRIs beat FDI, keep the money coming". Hindustan Times. 8 October 2012. Retrieved 2014-07-09. 
  10. ^ "Indian Economy At a Glance [Infographic] - Quickonomics". Quickonomics. 12 September 2015. Retrieved 19 November 2016. 
  11. ^ Nair NG. Nair PRG, Shaji H, ed. Measurement of Employment, Unemployment, and Underemployment (PDF). Kerala Research Programme on Local Level Development. Thiruvananthapuram: Centre for Development Studies. ISBN 81-87621-75-3. Retrieved 31 December 2008. 
  12. ^ Government of Kerala 2004, p. 4.
  13. ^ "Kerala economy climbs to $23b by 2005". 31 March 2009. Retrieved 23 March 2012. 
  14. ^ Nandakumar, T (10 Jul 2014). "Kerala can bear rising debt burden: Mani". The Hindu. Retrieved 29 Dec 2015. 
  15. ^  Missing or empty |title= (help)
  16. ^  Missing or empty |title= (help)
  17. ^ [1] Archived 27 March 2010 at the Wayback Machine.
  18. ^ (Sreedharan 2004, p. 5).
  19. ^ "Bevco pockets Rs.600 crore in December". The Hindu. Chennai, India. 5 January 2011. 
  20. ^ "Official web site of Kerala State Beverages Corporation Limited". Retrieved 23 March 2012. 
  21. ^ Martin, K. a (19 August 2016). "Just click to clink: Kerala takes liquor sales online". Retrieved 2 April 2018 – via 
  22. ^ "Just click to clink: Kerala sets a record by reducing alcohol consumption". India Today. 10 Dec 2015. Retrieved 25 Apr 18 – via  Check date values in: |access-date= (help)
  23. ^ GCC residency cap may force lakhs to return by Biju Govind; The Hindu - Tuesday, 19 Aug 2008
  24. ^ (DeParle 2007).
  25. ^ "Remittances: Kerala drives dollar flows to India". Yahoo! Finance. 5 November 2013. Retrieved 8 November 2013. 
  26. ^ "Remittances to Kerala set to decline". Times of India. 12 Jan 2018. 
  27. ^ "High time Kerala looked beyond remittance income, says study". Deccan Chronicle. 4 November 2013. Retrieved 8 November 2013. 
  28. ^ Our Bureau (13 March 2012). "Business Line : OTHERS / STATES : Kerala largest originator of education loans". Retrieved 23 March 2012. 
  29. ^


External links

  • Conundrum of Kerala's struggling economy BBC News
  • Kerala Economic Association's Official Website
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