Kerala Business and Economy

About Business and Economy

Business and Economy

Kerala's achievements and developmental experience have attracted worldwide attention. This is mainly because it has attained a better quality of life combined with highest literacy rate. It is a fact to be noted that this has been achieved without a significant increase in investment, production and agricultural or industrial growth. This means that in short, Kerala's economy actually remains backward in many respects and is heavily reliant on overseas remittances.

The state has been liberalising its economy, thus moving to a more mixed economy with a greater role to play in the free market and foreign direct investment. Kerala's nominal gross domestic product (as of 2004–2005) is estimated to be 89451.99 crore INR. The GDP growth was 9.2% in 2004–2005 and 7.4% in 2003–2004. It has been robust compared to historical averages (2.3% annually in the 1980s and between 5.1% and 5.99% in the 1990s). There are relatively few major corporations and manufacturing plants choose to operate in Kerala. But this is mitigated by the remittances sent home by overseas Keralites, which contributes around 20% of state GDP. Kerala's per capita GDP is significantly higher than the all-India average. Additionally, Kerala's Human Development Index and standard of living statistics are the nation's best. This contributes to the economy of the state mainly to the service sectors.

The service sector includes tourism, public administration, banking and finance, transportation, and communications. The service sector along with the agricultural and fishing industries dominate Kerala's economy. Nearly half of Kerala's people are dependent on agriculture alone for income. Some 600 varieties of rice (Kerala's most important staple food and cereal crop) are harvested in paddy fields and 688,859 tonnes are produced per annum. Other key crops include coconut (899,198 ha), tea, coffee (23% of Indian production, or 57,000 tonnes), rubber, cashews, and spices including pepper, cardamom, vanilla, cinnamon, and nutmeg. Around 10.50 lakh (1.050 million) fishermen haul an annual catch of 6.68 lakh (668,000) tonnes (1999–2000 estimate) and there are 222 fishing villages along the 590 km coast, while an additional 113 fishing villages are spread throughout the hinterland.

There are many traditional industries manufacturing items such as coir, handlooms, and handicrafts employing around ten lakh (one million) people. Around 1.8 lakh (180,000) small-scale industries employ around 909,859 Keralites, while some 511 medium- and large-scale manufacturing firms are located in Kerala.

A small mining sector (0.3% of GDP) is involved in the extraction of materials such as ilmenite (136,908.74 tonnes in 1999–2000), kaolin, bauxite, silica, quartz, rutile, zircon, and sillimanite. Home gardens and animal husbandry also provide work for hundreds of thousands of people. Tourism, manufacturing, and business process outsourcing comprise other significant economic sectors.

Despite Kerala's education successes, the region has not yet been able to provide its literate population with enough work. Kerala has a rural employment rate of 11.6 percent and an urban employment rate of 12.2 percent, according to an economic review published by the Kerala government in 2003. The statewide poverty rate estimates range from 12.71% to as high as 36%, with more than 45,000 Keralites living in slum conditions.