CSES in Media

Kerala has higher growth potential, says study

This report on CSES study was published in The Hindu on 06/05/2011

‘Opening up of economy turns disadvantages into opportunities’

Kerala has potential for much faster economic growth as a number of factors crucial to the State economy are now turning favourable, says a study by the Kochi-based Centre for Socio-Economic and Environmental Studies (CSES).

Many pluses

The study by CSES director K.K. George points out that its geographical positioning and strong linkages with international markets; its physical, financial and communication infrastructure; the low rate of labour disturbances in recent times; and its potential to attract investment and technical and managerial skills from emigrant Malayalis are all pluses that could, if leveraged well, see the State hit a high growth trajectory.

Titled ‘Kerala economy: growth, structure, strength and weakness’, the study points out that the shift from a fixed exchange rate system to a floating one, though still being managed by the Reserve Bank of India, has turned out to be advantageous for Kerala since 1991. The State’s geographical position (being far from the input and output markets), a disadvantage when Indian economy remained closed, is turning out to be an advantage with the opening up of the economy.

Data traffic

Kerala’s close proximity to the international shipping route has become a great advantage, now that two container terminals—one in Kochi and the other in Vizhinjam—are going to be located on the State’s coast. Kochi today is the only place in India where South Africa Far East (SAFE) submarine optic fibre cables land.

South East Asia-Middle East-Western Europe cable network (SEA) also lands at Kochi, which is also emerging as a gateway handling 70 per cent of India’s data traffic. Kochi has a 15 GBPS VSNL International Gateway Exchange and the Kerala circle of Bharat Sanchar Nigam Ltd. (BSNL) has the second largest basic service network out of the 24 telecom circles in India.

Kerala already ranks first in the infrastructure index among Indian States and has the highest tele-density of 15.4 per 100 people. It also has a relatively well-developed social infrastructure for education and health care. All that is now required is investment to upgrade their quality and modernise services.

Social factors

Another positive for Kerala is that it enjoys a comparatively better social stability and communal and caste conflicts are absent owing to the cultural synthesis that dates back to its early history and the social reform movements of the last two centuries, the study says.

The State’s negative image as a place of disturbed labour relations is now changing as strikes and lock-outs, which were quite frequent in Kerala in the 1960s and the 1970s, have now come down considerably. There is much scope for value addition to its export of agricultural and traditional industrial products. Kerala’s rich biodiversity and the traditional knowledge regarding the many uses of the State’s flora and fauna offer potential for development of biotechnology provided the research capacity in this area is enhanced considerably.