December 18, 2022

Kerala on the Path of Growth and Development

K N Balagopal

KERALA'S economy achieved a commendable growth rate of 12.8 per cent for the financial year 2021-22, according to the report of the National Statistical Office, released on November 15, 2022. That this translates into an increase of 14.4 per cent compared to the growth rate of the pre-pandemic year 2018-19, adds more glitter to Kerala's accomplishment. There is one more reason to highlight the growth performance of the state, which is that the manufacturing sector emerges as the second largest growing sub-sector next to mining and quarrying during this period. The initiatives of the state government including the infrastructure investment during the past years could be attributed to this turnaround. It is also to be noted that the per capita income of the state went up by 12.5 per cent in 2021-22.

Kerala's gross domestic product rose from Rs 7,99,571 crore in 2020-21 to Rs 9,01998 crore in 2021-22 (at current prices). This indicates that the state is coming out of the economic slowdown it faced following two floods and the covid pandemic. The significant aspect of Kerala's progress in the growth front is that it is taking place against the backdrop of both national as well as global economies still battling to ward off several setbacks.


The estimates and analysis contained in the reports of many international agencies such as United Nations Conference on Trade and Development (UNCTAD), World Trade Organisation (WTO), International Monetary Fund (IMF), Organisation of Economic Cooperation and Development (OECD), released in October 2022, all indicate that the global economy is in the proximity, or worse still under the grip of a recession.

The report of the WTO states that the consequences of Russia-Ukraine war, interest rate hikes by central banks, skyrocketing energy prices and inflation will push down the global commodity trade to a mere 1 per cent in 2023.

As per the IMF's World Economic Outlook, the global economy will grow by just 2.7 per cent in 2023. The growth projection for 2022 at 3.2 per cent is also disappointing compared to the figure of 6 per cent achieved in 2021. The report further states that the global economy will shrink by one third in the next two quarters. The IMF predicts that if we take into account the state of global production up to 2026, there will be a loss of $4 trillion. This will be the worst economic scenario since 2001.

The report of UNCTAD cautions that growth will come down in all countries. 60 per cent of low income countries and 30 per cent of developing countries are facing the prospect of default in debt repayment. This will lead to social disquiet and insecurity. 

As per the OECD forecast, global economic growth rates are 3.1 per cent and 2.3 per cent respectively for 2022 and 2023. The report also notes that the world is experiencing biggest energy crisis and price rise since 1970.


All the basic indicators of Indian economy point to the fact that the situation is not at all promising. Rupee is losing its value continuously. As on November 24, 2022, the exchange rate of rupee against dollar is 81.71. There has been a fall of 10 per cent in the value of rupee in the last one year.

The trade and current account deficits are also moving upwards alarmingly. And this is making a huge dent in the foreign exchange reserves. The exports for October 2022 came down by 17 per cent to $29.78 billion. The trade deficit for that month was $26.91 billion. Despite the RBI's frequent repo rate hikes, inflation has not been brought under control. The rate of inflation was 6.77 in the month of October 2022, and it has remained above the RBI upper limit of 6 per cent for the last nine months.

International economic indicators also do not project a rosy picture of India. We have slipped to 107th rank in Global Hunger Index. Among the South Asian countries only the war-torn Afghanistan is behind us. Even countries like Rwanda (102), Nigeria (103), Ethiopia (104) and Sudan (106) are ahead of us in the ranking.


Kerala passed through a very difficult period of crisis brought about by the loss and damages from two consecutive floods of 2018 and 2019, including one once-in-a-century deluge, the crisis due to currency withdrawal and heavy spread of Covid-19 that shattered the economy. Kerala could overcome these unprecedented crises with an achievement of 12.8 per cent growth rate. 

To understand the special nature of this achievement, a comparison with other states especially the economically advanced states in the country, may come in handy. As per the statistics for the year 2019-20, 39 per cent of children in Gujarat are suffering from wasting. The corresponding figure for Kerala is 23.4 per cent, the least for any state in India. Child mortality rate for Gujarat is 31.2 per 1000 births, whereas for Kerala it is only 4.4. Examination of any important social development indices will show that Kerala is way ahead of other states in the country.

In the recent report prepared by the RBI based on the details collected from Indian Labour Journal about wages paid by different states to daily wage labourers, Kerala is in number one place as the state has been providing maximum wages. Gujarat is the state where daily wage labourers are being paid the least. Wages in farm, non-farm and manufacturing sectors are also the highest in Kerala. The farm sector wage in Kerala is Rs 726.8. In Jammu & Kashmir, which comes second in providing better wages in farm sector, the amount is Rs 524.6. The average wage in manufacturing sector in Kerala, again the highest in the country, is Rs 737.7. Here also, Jammu Kashmir is the second best wage provider with Rs 519.8. The amount is just Rs 478.6 in Tamil Nadu. All these point to the fact that at least some kind of fair distribution of wealth is taking place in Kerala. But, this is not the case in most other states.

The record of Kerala in giving employment to new job aspirants through the Public Service Commission (PSC) is also the best among the states. During the 2016-2021 period of the LDF government, 1,65,000 jobs were given through the PSC. During the present LDF government till November 2022, 37,840 PSC appointments were given. During this period, wage revision was also implemented for state government employees and teachers.

When the central government decided to close Hindustan Newsprint Limited, a unit owned by it at Kottayam, the state government took over the same, and has started production in the firm from November 1, 2022, after renaming it as Kerala Paper Products Ltd. In this manner, the LDF government is trying to protect the public sector institutions being close down by the central government.

Kerala has won several awards for meritorious performance in various sectors like the Aarogya Mandhan prize of the central government for extending free medical treatment for highest number of people, most happy state award of India Today news magazine, Vayoshresta award of the central government for taking care of the elders and Glenmark award for Kudumbashree for implementation of nutritional programme for children, to list a few of them. These recognitions are indeed glowing testimonies to the successful growth story of Kerala.

Compared to the national situation, Kerala is experiencing inflation to a lesser extent. While consumer price index went up by 7 per cent for the whole nation in August 2022, corresponding increase for Kerala was just 5.73 per cent. This was achieved through effective steps taken by the state to rein in inflation and a strong public distribution system.

The Rebuild Kerala Project envisaged for the reconstruction of Kerala from the devastation caused by two floods; two packages worth Rs 20,000 crore each to prop up the economy from the impact of Covid; the support provided to small industries; free food kits to families; timely and regular distribution of social security pension – have all contributed to Kerala's advance on the growth trajectory.

This achievement has been realised notwithstanding the shortfall of around Rs 25,000 crore caused to the state's exchequer by the unfriendly measures of the central government like cutting down of its share from tax earnings, doing away with GST compensation, reducing revenue deficit grant year after year and curtailing loan availing limit.

There are historical as well as political reasons behind these achievements of Kerala. The meritorious performance of the state in human development indices is the result of the alternative politics put forward by the state. A development perception aiming comprehensive and equitable growth and a governing system with people's participation are the bedrocks of the state's successful growth story. The Left Front government is moving forward with the objective of ensuring justice and better life for the people.