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After independence, the state was managed as a democratic socialist welfare economy. From the 1990s, liberalisation of the mixed economy allowed onerous Licence Raj restrictions against capitalism and foreign direct investment to be lightened, leading to economic expansion and increase in employment. In the fiscal year 2007–2008, the nominal gross state domestic product (GSDP) was 1624 billion (US$25 billion). GSDP growth; 9.2% in 2004–2005 and 7.4% in 2003–2004 had been high compared to average of 2.3% annually in the 1980s and between 5.1%[164]:8 and 5.99%[165] in the 1990s.[164]:8 The state recorded 8.93% growth in enterprises from 1998 to 2005, higher than the nation’s rate of 4.80%.[166] Human Development Index rating is the highest in India at 0.790.[167] The “Kerala phenomenon” or “Kerala model of development” of very high human development and in comparison low economic development has resulted from a strong service sector.[126]:48[168]:1

Kerala’s economy depends on emigrants working in foreign countries, mainly in the Gulf states, and remittances annually contribute more than a fifth of GSDP.[169] In 2008, the Gulf countries together had a Keralite population of more than 2.5 million, who sent home annually a sum of US$6.81 billion, which is the highest among Indian states and more than 15.13% of remittance to India in 2008.[170] In 2012, Kerala still received the highest remittances of all states: $11.3 billion, which was nearly 16% of the $71 billion remittances to the country.[171] In 2015, NRI deposits in Kerala have soared to over Rs 1 lakh crore, amounting to one-sixth of all the money deposited in NRI accounts, which comes to about Rs 7 lakh crores ($115 billion).[172] However, a study commissioned by the Kerala State Planning Board, suggested that the state look for other reliable sources, instead of relying on remittances to finance its expenditures.[173] According to a study done in 2013, Kerala also loses about Rs 17,500 crores every year, through the sizable population of migrant labourers in Kerala,[174] which is a considerable amount compared to the annual state budget.

The tertiary sector comprises services such as transport, storage, communications, tourism, banking and insurance and real estate. In 2011–2012, it contributed 63.22% of the state’s GDP, agriculture and allied sectors contributed 15.73%, while manufacturing, construction and utilities contributed 21.05%.[175][176] Nearly half of Kerala’s people depend on agriculture alone for income.[177] Around 600 varieties[131]:5 of rice which are Kerala’s most used staple food and cereal crop[178]:5 are harvested from 3105.21 km2; a decline from 5883.4 km2 in 1990.[178]:5 688,859 tonne paddy are also produced per year.[179] Other key crops include coconut; 899,198 ha, tea, coffee; 23% of Indian production,[180]:13 or 57,000 tonnes,[180]:6–7) rubber, cashews, and spices—including pepper, cardamom, vanilla, cinnamon, and nutmeg. Around 1.050 million fishermen haul an annual catch of 668,000 tonnes as of 1999–2000 estimate; 222 fishing villages are strung along the 590 km coast. Another 113 fishing villages dot the hinterland. Kerala’s coastal belt ofKarunagappally is known for high background radiation from thorium-containing monazite sand. In some coastal panchayats, median outdoor radiation levels are more than 4 mGy/yr and, in certain locations on the coast, it is as high as 70 mGy/yr.[181]

Traditional industries manufacturing items; coir, handlooms, and handicrafts employ around one million people.[182] Kerala supplies 60% of the total global produce of white coir fibre. India’s first coir factory was set up in Alleppey in 1859-60.[183] The Central Coir Research Institute was also established in 1959 in Alleppy. As per the 2006–2007 census by SIDBI, there are 1,468,104 micro, small and medium enterprises in Kerala employing 3,031,272 people.[184][185] The KSIDC has promoted more than 650 medium and large manufacturing firms in Kerala, creating employment for 72,500 people.[186] A mining sector of 0.3% of GSDP involves extraction of ilmenite, kaolin, bauxite, silica, quartz, rutile, zircon, and sillimanite.[179] Other major sectors are tourism, manufacturing, home gardens, animal husbandry and business process outsourcing. As of March 2002, Kerala’s banking sector comprised 3341 local branches: each branch served 10,000 persons, lower than the national average of 16,000; the state has the third-highest bank penetration among Indian states.[187] On 1 October 2011, Kerala became the first state in the country to have at least one banking facility in every village.[188] Unemployment in 2007 was estimated at 9.4%;[189] chronic issues areunderemployment, low employability of youth, and a low female labor participation rate of only 13.5%,[190]:5, 13 as is the practice of Nokku kooli, “wages for looking on”.[191] By 1999–2000, the rural and urban poverty rates dropped to 10.0% and 9.6% respectively.[192]

Technopark, Thiruvananthapuram is the largest IT employer in Kerala and employs around 35,000 people. It was the first technology park in India[193][194] and with the inauguration of the Thejaswini complex on 22 February 2007, Technopark became the largest IT Park in India.[195] Software giants like Infosys, Oracle, Tata Consultancy Services, Capgemini, HCL, UST Global, Nest, Suntec and IBS have offices in the state.[196]Thiruvananthapuram is also the “IT Hub of Kerala” and accounts for around 80% of the software exports.[197] The Grand Kerala Shopping Festival (GKSF) claimed to be “Asia’s largest shopping festival” was started in the year 2007.[198]

The state’s budget of 2012–2013 was 481.42 billion.[199] The state government’s tax revenues (excluding the shares from Union tax pool) amounted to 217.22 billion in 2010–2011; up from 176.25 billion in 2009–2010. Its non-tax revenues (excluding the shares from Union tax pool) of the Government of Kerala reached 19,308 million in 2010–2011.[199] However, Kerala’s high ratio of taxation to GSDP has not alleviated chronic budget deficits and unsustainable levels of government debt, which have impacted social services.[200] A record total of 223 hartals were observed in 2006, resulting in a revenue loss of over 20 billion ( 20 billion).[201] Kerala’s 10% rise in GDP is 3% more than the national GDP. In 2013, capital expenditure rose 30% compared to the national average of 5%, owners in two-wheelers rose by 35% compared to the national 15%, and the teacher-pupil ratio rose 50% from 2:100 to 4:100.[202]

Agriculture[edit]

Agriculture in Kerala has passed through many phases. The major change occurred in the 1970s when production of rice reduced due to increased availability of rice supply all over India and decreased availability of labour supply.[203] Consequently, investment in rice production decreased and a major portion of the land shifted to the cultivation of perennial tree crops and seasonal crops.[204][205] Profitability of crops reduced due to shortage of farm labour, the high price of land and the uneconomic size of operational holdings.[206]

Kerala produces 97% of the national output of black pepper[207] and accounts for 85% of the area under natural rubber in the country.[208][209] Coconut, tea, coffee, cashew, and spices—including cardamom, vanilla,cinnamon, and nutmeg comprise a critical agricultural sector.[210][211][212][213][214][215] The key agricultural staple is rice, with varieties grown in extensive paddy fields.[216] Home gardens comprise a significant portion of the agricultural sector.[217] Related animal husbandry is touted by proponents as a means of alleviating rural poverty and unemployment among women, the marginalised, and the landless.[218][219] The state government promotes these activity via educational campaigns and the development of new cattle breeds such as the Sunandini.[220][221]

Though the contribution of agricultural sector to the state economy was on the decline in 2012-13, under the strength of the allied livestock sector, it has picked up from 7.03% (2011–12) to 7.2%. In the current fiscal (2013–14), the contribution has been estimated at a high of 7.75%. The total growth of farm sector has recorded a 4.39% increase in 2012-13, over a paltry 1.3% growth in the previous fiscal. The primary sector comprising agriculture has a share of 9.34% in the sectoral distribution of Gross State Domestic Product at Constant Price, while the secondary and tertiary sectors has contributed 23.94% and 66.72% respectively.[222]

Ill-effects due to the usage of synthetic fertilizers and pesticides has gradually contributed to preferences for organic products and home farming, and as a result the Kerala government plans to shift to fully organic cultivation by 2016.[223][224]

Entekrishi.com is Kerala’s first online open market for consumers/Farmers to connect directly with each other. Entekrishi.com provides a platform or rather a virtual market for farmers and end consumers where theFarmers can display their crops, mention the quantity, specify the method of cultivation, expected price for the commodity and contact details. Farmers can post their products for any quantity ranging from 1 Kg to 1 Ton which means even a person having a kitchen farm may find a buyer.[225]

Water filled paddy fields.

Fisheries[edit]

With 590 km of coastal belt,[226] 400,000 hectares of inland water resources[227] and approximately 220,000 active fishermen,[228] Kerala is one of the leading producers of fish in India.[229] According to 2003–04 reports, about 1.1 million people earn their livelihood from fishing and allied activities such as drying, processing, packaging, exporting and transporting fisheries. The annual yield of the sector was estimated as 608,000 tons in 2003–04.[230] This contributes to about 3% of the total economy of the state. In 2006, around 22% of the total Indian marine fishery yield was from the state.[231] During the southwest monsoon, a suspended mud bank develops along the shore, which in turn leads to calm ocean water, peaking the output of the fishery industry. This phenomenon is locally called chakara.[232][233] The fish landings consist of a large variety: pelagic species; 59%, demersal species; 23%, crustaceans, molluscs and others for 18%.[231]

Urban development[edit]

In 2015, the central government selected the following cities of Kerala state for a comprehensive development program called the Atal Mission for Rejuvenation and Urban Transformation (AMRUT):[234] Kochi, Kozhikode, Malappuram, Thrissur, Thiruvananthapuram, Kannur, Kollam, Cherthala, Kayamkulam, Kottayam, Palakkad, Alappuzha, Ottappalam, Kanhangad, Kasaragod, Changanassery, Chalakkudi and Kothamangalam.[citation needed]