An Introduction to Kerala Economy

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An Introduction to Kerala Economy

Kerala is known as God’s own country. The state is located along the coastline to the extreme southwest of the Indian peninsula, flanked by the Arabian Sea on the west and the mountains of the Western Ghats on the east. The state has a coastline of 580 km.

Kerala is one of the few states to have marketed its natural beauty successfully to the leisure tourism sector. The state’s unique heritage and cultural diversity have helped attract tourists from the world over. BBC Travel survey has rated Kerala as the top favourite tourist destination among foreign travellers.

It is a leading agricultural state in the country and the largest producer of rubber, pepper, coconut and coir. As per budget 2016-17, Government of Kerala proposed an outlay of US$ 116.74 million for the agriculture sector.

Kerala has a wide range of fiscal and policy incentives for businesses under the Industrial and Commercial Policy and has well-drafted sector-specific policies. Kerala stands 18th among Indian states in rankings based on ease of doing business and reforms implementation, according to a study by the World Bank and KPMG.

Kerala Economy

Kerala has witnessed tremendous development especially from the economic point of view. Although Kerala economy is primarily based on agriculture, the strong historical significance and natural attributes of the state have resulted in the presence of several industries in Kerala.

Kerala has the following to its credit:

  • The highest literacy rate in India.
  • Tourism has grown to be a front line industry government backing and private management.
  • An efficient public transport system.
  • Information Technology is becoming a key area of economic excellence

Role of agriculture in Kerala economy:
The following are the features of the predominantly agrarian economy of Kerala:

  • Kerala is a major producer of cash crops like coconuts, rubber, tea, coffee, pepper, cardamom, cashew, areca nut, nutmeg, ginger, cinnamon, and cloves.
  • Coconuts bring the people their principal source of earning in agriculture. Nearly 70% of Indian output of coconuts is provided by Kerala. .
  • Cardamom is one of the major exports of India and the bulk of Cardamom comes from Kerala.

Role of industry in Kerala economy:
Industries of Kerala economy are hugely based on agriculture and marine products. Some traditional industries are:

  • Coir and coir products
  • Marine products
  • Handloom and handicrafts related to ivory, wood, bone carving, hand embroidery, cane works, coconut shell carving, and paddy straw picture making.
  • Village industries manufacture Khadi, fiber, pottery, lime, paper, matches, gobar gas, cane, and bamboo.

The economy of Kerala, though small and agro-based, has a lot to look forward in future with the upcoming of IT and allied industries that are willing to exploit the yet-to-be tapped resources.

 

Alcohol

Ironically one of Kerala’s major social problems is also a huge revenue earner for the state. Kerala consumes more alcohol than any other state in India. The state government holds a 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 and beer sales have been rising and the total sales of liquor and beer during fiscal year are expected to be about Rs. 6,700 crore.

The government applies the highest state tax in the country on liquor (around 150%). This earns it high revenues. Rum is the favorite alcohol beverage for Keralites followed by brandy.

Tourism:

Kerala is an established tourist destination for both Indians and non-Indians alike. Tourists mostly visit such attractions as the beaches at Kovalam, Cherai and Varkala, the hill stations of Munnar, Nelliampathi, 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 Alleppey, Kumarakom, and Punnamada — also see heavy tourist traffic. Examples of Keralite architecture, such as the Padmanabhapuram Palace, Padmanabhapuram, are also visited. The capital city Thiruvananthapuram, Kochi (called as the “Queen of the Arabian Sea”), and Alappuzha (called the “Venice of the East”), are popular destinations. Tourism plays an important role in the state’s economy.

Banking:

Kerala is the single largest originator of education loans for the country as a whole. Total disbursal of education loans amount to Rs 6,000 crore.

Infrastructure

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. 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%.

 

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