Invest Kerala | Economy

In the fiscal year 2021-22, the Indian state of Kerala witnessed a remarkable and robust economic recovery. The Gross State Domestic Product (GSDP) in real terms surged by a remarkable 12.01%. This starkly contrasted with the previous year's downturn of -8.43%. This remarkable recovery was underpinned by an impressive growth in the Gross State Value Added (GSVA) at constant 2011-12 prices, which rebounded from a significant decline of -10.0% in 2020-21 to an impressive growth of 12.1% in 2021-22.One of the notable achievements during this period was the increase in per capita GSDP in Kerala, which stood at ₹1,62,992 in 2021-22. This not only reflected a notable economic recovery but also surpassed the corresponding national average of ₹1,07,670, indicating that the average income per person in Kerala was notably higher than the Indian average in the fiscal year 2021-22.

The state's impressive recovery can be attributed to a counter-cyclical fiscal policy that included the implementation of various stimulus packages. The government played a pivotal role in offering relief, particularly to the most vulnerable sections of society, by providing essential services, goods, and cash support. This proactive approach ensured that the economic recovery was not only substantial but also inclusive. Furthermore, the fiscal indicators for the state remained stable, indicating prudent financial management. The revenue deficit as a percentage of GSDP decreased to 2.29% in 2021-22, compared to 2.51% in the previous fiscal year. Similarly, the fiscal deficit as a percentage of GSDP, which was 4.57% in 2020-21, saw a notable decrease to 4.11% in 2021-22 and is estimated to further decrease to 3.91% in 2022-23. These indicators demonstrate the state's commitment to maintaining fiscal discipline while ensuring economic growth and social welfare.

Moreover, the revenue receipts of the state, in proportion to GSDP, increased marginally to 12.86% in 2021-22, compared to 12.66% in the previous fiscal year. Notably, the state's own tax revenue and state's own non-tax revenue increased by 27.01% and 12.49%, respectively, according to the 2022-23 Budget Estimates. This significant growth in revenues allowed the state to undertake essential development and welfare initiatives.

In terms of sectoral composition, Kerala exhibited positive growth across various sectors. Agriculture and allied activities saw a notable increase of 4.64% in 2021-22, compared to a mere 0.24% in 2020-21. Crop sector recorded an increase of 3.63% compared to 0.46% in the previous fiscal year. The overall increase in sectoral growth indicates the resilience of the state's economy.

Agriculture continued to be a significant contributor to the state's economy, with food crops accounting for 10.51% of the gross cropped area in 2021-22. Cash crops, including cashew, rubber, and tea, constituted a substantial 65.8% of the gross cropped area, with rubber, coffee, tea, and cardamom accounting for 28.2% of this area.

The industrial sector also played a crucial role in the state's economic growth, accounting for about 26.82% of GSVA at constant basic prices in 2021-22. Manufacturing and construction subsectors registered positive growth rates, with the manufacturing sector accounting for 12.12% of GSVA. This sector's share has shown a consistent upward trajectory over the years, from 9.78% in 2014-15 to 12.12% in 2021-22.

The state government actively promoted the Micro, Small, and Medium Enterprises (MSME) sector. In the financial year 2022-23, the government initiated the "Year of Enterprises" program, with the goal of creating one lakh new enterprises in Kerala during the year. Remarkably, this ambitious target was achieved within a short period, leading to significant investments and job opportunities in the state.

Kerala's services sector remained a standout feature of its economy, contributing 63.85% to GSVA in 2021-22. Information Technology, tourism, and trade were among the top sectors within the services domain. Proactive government policies and investments facilitated the growth of the IT sector, with an increase in the number of tech start-ups, expansion of IT parks, and the implementation of projects like the KFON (Kerala Fiber Optic Network).

In conclusion, Kerala's remarkable economic recovery in 2021-22 reflects its commitment to inclusive growth, fiscal stability, and infrastructure development. The state's resilience, coupled with proactive policies, enabled it to achieve significant economic growth and social welfare, ensuring a better quality of life for its residents. Kerala continues to be a shining example of economic progress and human development in India.

High quality physical and social infrastructure tailored to achieve higher economic growth and high quality of life.

35m Population 94% Literacy rate; highest in India

$131.6 bn GSDP

$8.76 bn Primary sector GSVA

$67.8 bn Secondary sector GSVA

$3,512 Per capita Income; higher than national average

9th Largest economy in India

$133.5 bn Tertiary sector GSVA

$8.96 bn sector GSVA