Economy of Kerala

Kerala has a democratic socialist welfare economy. This has resulted in slow economic progress compared to neighbouring states, and relatively few major corporations and manufacturing plants choose to operate in Kerala.[20] This is mitigated by the remittances of overseas Keralites contributing 20% of State Domestic Product (SDP) .[21] Kerala’s economic productivity and per capita GDP - 11,819 INR[22] - lags behind that of the rest of India. However, Kerala’s Human Development Index and standard of living statistics are the nation’s best. This seeming paradox is often dubbed the “Kerala phenomenon” or the “Kerala model” of development, and arises mainly from Kerala’s unusually strong service sector.

Agriculture dominates Kerala’s economy. Some six hundred varieties[6] of rice are harvested from 310,521 ha of paddy fields; 688,859 tonnes are produced per annum. Other key crops include coconut (899,198 ha), tea, coffee, rubber, cashew, and spices - including pepper, cardamom, vanilla, cinnamon, and nutmeg. Home gardens and animal husbandry also provide work for hundreds of thousands of people. Tourism, manufacturing, and business process outsourcing comprise other significant economic sectors. Kerala’s unemployment rate is 19.2%,] althought underemployment of those classified as “employed” is a significant problem.

Agriculture dominates the Keralite economy. Kerala lags behind many other Indian states and territories in terms of per capita GDP (11,819 INR[1]) and economic productivity. However, Kerala’s Human Development Index and standard of living statistics are the best in India. Indeed, in select development indices, Kerala rivals many developed countries. This seeming paradox - low GDP and productivity figures juxtaposed with relatively high development figures - is often dubbed the “Kerala Phenomenon” or the “Kerala Model” of development by economists, political scientists, and sociologists. This phenomenon arises mainly from Kerala’s unusually strong service sector.