Dr. Lakshmi.
L
Asst.Professor of Economics
Govt.College, Attingal
FEATURES OF KERALA ECONOMY
Kerala occupies a unique position among the Indian states with respect to many
factors. The state has made spectacular achievements in the field of education,
health, standard of living etc and it sets an example for the rest of India and third
world countries in many of the social indicators.
Economic Features
1. Stagnant Agricultural Sector
2. Industrial Backwardness
3. Predominance of Service Sector
4. Low Incidence of Poverty
5. High level of literacy
6. Good health indicators
7. Educated unemployment
8. Migration
9. High fiscal deficit
Stagnant Agricultural Sector
Kerala witnessed a significant decline in agricultural production in the last few
decades. The contribution of agriculture to the Gross State Domestic Product
(GSDP) declined significantly from 55 per cent in 1960–61 to 8.95 per cent in
2013–14.
Industrial Backwardness
Since independence, industries in Kerala are not performing well. It has been
particularly unsuccessful with respect to generating employment opportunities
for the relatively educated workforce in the State. The relative industrial
backwardness of Kerala has been a puzzling question and the popular argument
1
is that industrial backwardness is due to labour problems, high wage-cost and low
productivity.
Predominance of Service Sector
The services sector has been a major and vital force in the Kerala economy for
more than many decades. The service sector plays the leading role in generating
employment in the state and it also accounts for the major share of the state gross
domestic product.
Low Incidence of Poverty
Kerala has experienced a steady decline in poverty since 1970s. According to the
official data, the incidence of poverty in Kerala was 59.74% in 1973-74 which
reduced to 11.3 % in 2011-12. (In India, it is 29.5%).
High Level of Literacy
In 1991, Kerala was the first state in India to be recognized as a complete literate
state, though the effective literacy rate at that time was 90%. As of 2007 the net
enrolment in elementary education was almost 100% and was almost balanced
among sexes, social groups and regions unlike other states in India. According to
the 2011 census, the literacy rate in Kerala is 93.91%.
Good Health Indicators
In many respects, Kerala’s health status is almost on a par with that of developed
economies. The state has succeeded in increasing life expectancy as well as
reducing infant and maternal mortalities. The State has a better health standard
with low birth and death rate, rapidly declining population growth rate, and high
level of acceptance of family planning methods.
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Educated Unemployment
With respect to the employment scenario in the state, there has been a structural
imbalance between the supply of highly educated people and the creation of
employment opportunities within the state boundary. This imbalance has created
a lot of issues in the employment sector of Kerala and the prevalence of high level
of educated unemployment and underemployment in the state is the result of this
imbalance.
Migration
The biggest stimulus to Kerala’s economic growth comes from the remittances
sent by its migrant workers. Kerala Migration Survey 2014 estimated that there
are more than 24 lakh Malayalees living in various countries, and it should be
kept in mind that the total population of the state is only 334 lakhs as per the 2011
census. At the same time, a rising stream of migrant workers from other States,
mainly Bihar, West Bengal and Odisha, meets the large demand for unskilled
labour in Kerala.
High Fiscal Deficit
Kerala’ fiscal position is in an alarming state. The revenue deficit of Kerala has
been higher than that of many other Indian states for a long time. With a per capita
liability of Rs. 28295, the burden of debt is indeed very high in the state which
creates debt stress. The root cause for the continuous revenue and fiscal deficits
of the state is mainly the high growth in the expenditure on salaries and pensions.
Due to this peculiar situation, the state faces acute resource crunch to meet
developmental expenditure in core areas of infrastructure, public utilities and
public services.
