Kerala economy updates
Gross State Domestic Product
The Gross State Domestic Product of Kerala for 2019-20 (at current prices) is estimated to be Rs 8,75,514 This is 13% higher than the revised estimate for 2018-19.
Trends in economic Growth
The quick estimate of Gross State Domestic Product (GSDP) at constant (2011-12) prices is ₹5,13,69,589 lakh in 2017-18 as against the provisional estimate of ₹4,79,28,990 lakh in 2016-17, registering a growth rate of 7.18 per cent in 2017-18 compared to 6.22 per cent in 2016-17 (Figure 1.1). At current prices, the GSDP is estimated at ₹6,86,76,443 lakh (quick estimate) in 2017-18 as against the provisional estimate of ₹6,16,35,704 lakh in 2016-17 showing a growth rate of 11.42 per cent. (Economic review 2018)
Total expenditure
Total expenditure for 2019-20 is estimated to be Rs 1,41,980 crore, a 13.9% increase over the revised estimate of 2018-19. In 2018-19, there is estimated to be a decrease of Rs 2,415 crore (1.9% of the budgeted estimate) of expenditure as per the revised estimate. (Budget 2019-20)
Total receipts
Total receipts (excluding borrowings) for 2019-20 are estimated to be Rs 1,15,690 crore, an increase of 14.6% as compared to the revised estimate of 2018-19. In 2018-19, total receipts (excluding borrowings) are estimated to fall short of the budgeted estimate by Rs 2,144 crore (2.1%). (Budget 2019-20)
Kerala Flood Cess
The GST Council had permitted the state to levy 1% cess on supply of goods and Services for up to two years for rebuilding Kerala. Except gold, this cess will not be levied on goods with GST rate of 5% or below. Small dealers who have availed composition tax will be excluded from the levy of cess. For supply of goods which are taxed at 12%, 18% and 28%, and on all services, 1% flood cess will be imposed on the value of supply. An additional revenue of Rs 600 crore is expected through this cess.
Tax proposals
Local bodies have been permitted to levy 10% entertainment tax on cinema tickets. The one-time tax on new motor cycles, motor cars, and private service vehicles used for private purpose will be increased by 1%. The tax rate on the first sale of foreign liquor will be increased by 2%. (Budget 2019-20)
Infrastructure-2/”>INFRASTRUCTURE projects
Rs 1,000 crore has been earmarked for Rebuild Kerala initiative. An outer ring-road on the Parippally-Vengod-Aruvikkara-Vizhinjam route, and an allied growth corridor have been proposed around the Vizhinjam Port.
Per capita income
As per the quick estimates, the per capita GSDP at constant (2011-12) prices in 2017-18 was ₹1,48,927 as against the provisional estimate of ₹1,39,645 in 2016-17, recording a growth rate of 6.65 per cent in 2017-18. At current prices, the per capita GSDP in 2017-18 was ₹1,99,101 registering a growth rate of 10.87 per cent over the previous year’s estimate of ₹1,79,580.
At constant (2011-12) prices, the quick estimates of per capita NSDP in 2017-18 was ₹1,36,225 as against the provisional estimate of ₹1,27,729 in 2016-17, recording 6.65 per cent growth in 2017-18. Figure 1.2 shows that between 2012- 13 and 2017-18, the per capita NSDP at constant prices was higher than the per capita NSDP at all India level. (Economic review 2018)
According to the 5th Annual EMPLOYMENT-Unemployment Survey (2015-16), among the major states, Kerala has the highest unemployment rate at 12.5% as compared to the all-India level of 5%.
It is the excess of Revenue Expenditure over Revenue Receipts. A revenue deficit implies that the government needs to borrow in order to finance its expenses which do not create capital assets.
The budget estimates a revenue deficit of Rs 8,770 crore (or 1% of GSDP) in 2019-20. This implies that revenue receipts are expected to be lower than the revenue expenditure, resulting in a deficit. The 14th Finance Commission had recommended that states should eliminate revenue deficits. The 2019-20 estimates for Kerala suggest that the state will not be meeting this target of eliminating revenue deficit.
It is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government, and leads to an increase in total liabilities. In 2019-20, fiscal deficit is estimated to be Rs 26,291 crore, which is 3 % of the GSDP. The estimate is equal to the 3% limit prescribed by the 14th Finance Commission. This limit may be relaxed to a maximum of 3.5%, if states are able to contain their debt and interest payments to certain specified levels.
Grants-in-aid and contributions to local governments
The State Government provides compensation and assignments to local bodies and Panchayati Raj institutions. In 2019-20, this amount is estimated to be Rs 9,948 crore. This is a 33% increase from the revised estimates of 2018-19. The table below shows the past trends in grants given to local governments, and their development expenditure.
Total revenue receipts
The total revenue receipts for 2019-20 are estimated to be Rs 1,15,355 crore, an increase of 15.4% over the revised estimates of 2018-19. Of this, Rs 80,855 (70% of the revenue receipts) crore will be raised by the state through its own Resources, and Rs 34,500 crore (30% of the revenue receipts) will be devolved by the centre in the form of grants and the state’s share in taxes.
Non Tax Revenue
Kerala has estimated to generate Rs 15,070 crore through non-tax sources in 2019-20. Of this, Rs 11,873 crore will be received from state lotteries.
Tax Revenue
Total own tax revenue of Kerala is estimated to be Rs 65,785 crore in 2019-20. The composition of the state’s tax revenue is shown in Figure 2. The tax to GSDP ratio is targeted at 8% in 2019-20, which is in the same range as the revised estimate of 7% in 2018-19. This implies that growth in collection of taxes has been at par with the growth in the economy.
State Goods and Services Tax (SGST) is the largest component of tax revenue of the state. It is expected to generate Rs 29,011 crore in 2019-20. This is an increase of 27% from the revised estimates of 2018-19.
agriculture Sector (Budget allocation, 2019)
- An amount of INR 70 Crores has been announced for factories producing coconut-based products.
- A budget of INR 41 Crores has been granted for the Kerala Agricultural University (KAU) in Thrissur and INR 45 Crores for Kerala University of Fisheries-2/”>Fisheries and Ocean Studies (KUFOS).
- INR 500 Crores has been announced to support the prices of rubber.
- The cities of Thrissur, Palakkad and Alappuzha are to have rice parks as a part of the Budget.
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Kerala is a state in India with a Population of over 33 million people. It is located in the south-west of the country, on the Malabar Coast. Kerala has a long history of Trade and Commerce, and its economy is based on agriculture, Industry, and services.
Agriculture
Agriculture is the backbone of the Kerala economy, employing over 50% of the workforce. The main crops grown in Kerala are rice, coconut, tea, and rubber. The state also has a thriving Livestock industry, with over 20 million cattle and buffalo.
Industry
The Industrial Sector in Kerala is relatively small, but it is growing rapidly. The main industries are textiles, electronics, and chemicals. The state also has a number of small-scale industries, such as Food Processing and handicrafts.
Services
The services sector is the largest sector of the Kerala economy, accounting for over 60% of GDP. The main services are tourism, Banking, and Education. The state is also a major center for information technology and Software development.
Tourism
Tourism is a major Source Of Income for Kerala. The state has a number of beautiful beaches, backwaters, and hill stations. It is also home to a number of ancient temples and palaces.
Infrastructure
Kerala has a well-developed infrastructure, with a good Network of roads, railways, and Airports. The state also has a number of power Plants and water treatment plants.
Kerala has a high Human Development index (HDI), ranking 13th in the world. The state has a high Literacy rate and life expectancy. It also has a good healthcare system and a strong social safety net.
Social Development
Kerala has a low crime rate and a high level of social harmony. The state has a number of progressive social policies, such as free education and healthcare for all.
Kerala has been a pioneer in Economic Reforms In India. The state has implemented a number of reforms, such as Privatization and deregulation, which have helped to boost the economy.
Challenges and Opportunities
Kerala faces a number of challenges, such as high unemployment and a fiscal deficit. However, the state also has a number of opportunities, such as its strong Human Capital and its strategic location.
Overall, Kerala is a state with a strong economy and a high standard of living. The state faces some challenges, but it also has a number of opportunities. With continued economic reforms and Investment, Kerala has the potential to become one of the most prosperous states in India.
Here are some frequently asked questions and short answers about the Kerala economy:
- What is the size of the Kerala economy?
The Kerala economy is the 12th largest economy in India, with a gross state domestic product (GSDP) of â¹1.12 trillion in 2020-21.
- What are the main sectors of the Kerala economy?
The main sectors of the Kerala economy are agriculture, industry, and services.
- What is the contribution of each sector to the GSDP?
Agriculture contributes 12.5% to the GSDP, industry contributes 32.5%, and services contribute 55%.
- What are the main agricultural products of Kerala?
The main agricultural products of Kerala are rice, coconut, tea, rubber, and spices.
- What are the main industries of Kerala?
The main industries of Kerala are electronics, software, tourism, and handicrafts.
- What are the main service sectors of Kerala?
The main service sectors of Kerala are trade, transport, Communication, and financial services.
- What is the unemployment rate in Kerala?
The unemployment rate in Kerala is 6.1%, which is lower than the national Average of 7.1%.
- What is the POVERTY rate in Kerala?
The poverty rate in Kerala is 10.1%, which is lower than the national average of 21.9%.
- What is the literacy rate in Kerala?
The literacy rate in Kerala is 94.0%, which is the highest in India.
- What is the per capita income of Kerala?
The per capita income of Kerala is â¹1,81,222, which is higher than the national average of â¹1,40,695.
- What are the major challenges facing the Kerala economy?
The major challenges facing the Kerala economy are low investment, high debt, and brain drain.
- What are the government’s initiatives to address the challenges facing the Kerala economy?
The government’s initiatives to address the challenges facing the Kerala economy include increasing investment, reducing debt, and attracting skilled workers.
- What are the prospects for the Kerala economy in the future?
The prospects for the Kerala economy in the future are positive. The state has a young population, a skilled workforce, and a strong track record of economic growth.
Which of the following is not a major economic activity in Kerala?
(A) Agriculture
(B) Industry
(C) Tourism
(D) ITThe main agricultural products of Kerala are:
(A) Rice, coconut, tea, and coffee
(B) Rubber, spices, and cashew nuts
(C) All of the aboveThe main industries of Kerala are:
(A) Electronics, software, and tourism
(B) Rubber, chemicals, and engineering
(C) All of the aboveThe main exports of Kerala are:
(A) Tea, coffee, and spices
(B) Rubber, seafood, and software
(C) All of the aboveThe main imports of Kerala are:
(A) Petroleum products, machinery, and chemicals
(B) Foodgrains, Fertilizers, and Capital Goods
(C) All of the aboveThe main sources of revenue for the Kerala government are:
(A) Taxes, excise duties, and customs duties
(B) Central grants, state taxes, and non-tax revenue
(C) All of the aboveThe main expenditure of the Kerala government is on:
(A) Education, Health, and social welfare
(B) Infrastructure, agriculture, and industry
(C) All of the aboveThe main economic challenges facing Kerala are:
(A) High unemployment, low per capita income, and poor infrastructure
(B) High debt burden, low tax collection, and Corruption
(C) All of the aboveThe main economic reforms undertaken by the Kerala government in recent years are:
(A) Privatization of public sector enterprises, Disinvestment, and deregulation
(B) Fiscal Consolidation, Tax Reforms, and labor reforms
(C) All of the aboveThe main economic indicators of Kerala are:
(A) Gross State Domestic Product (GSDP), per capita income, and unemployment rate
(B) Debt-to-GSDP ratio, fiscal deficit, and Inflation rate
(C) All of the above