Perspectives by Ravikumar Pillai
GDP vs Per Capita Income - The Southern Scenario
Post-liberalisation, the Southern states of India witnessed robust growth and significant divergence in economic activities. GDP and Per Capita Income are the best indicators to show both these trends.
The South is playing a critical role in the resurgence of India’s manufacturing sector. The vast range of sectors and industries in which TN, Karnataka and the Andhra-Telangana twins are gaining big-ticket investments is testimony to the southern resilience in talent, entrepreneurship and infrastructure upgrade. It is gratifying to note the divergence between political slugfest and the seamless and welcoming promotion of investments and rollout of business-friendly policies.
Now, let us look at the GDP and Per Capita Income trends in the Southern states. India is very heterogeneous, and the diversity is reflected in culture, economy, politics, entrepreneurship and a whole range of life, society and business.
Kerala is the clear laggard in the aggregate Domestic Income, though in per capita income, the state deceives logic and fares high. Why so? The answer is that while the State GDP remains low, the massive inward remittances, basically by the Kerala diaspora in the Gulf and the Western countries have a huge multiplier effect on consumption levels and capital spending. This leads to improved earnings, liquidity and spending at the grassroot levels.
Kerala’s apparent economic resilience is not sustainable in the long term in the absence of a healthy manufacturing or agricultural sector. The domestic value addition in Kerala, sans the services sector, is abysmally low. The inward remittances by migrant, overseas employees from Kerala can be susceptible to geopolitical and global economic vulnerabilities. With geopolitics hotting up and with the possibility of extended and expanding tensions and global economic fallouts, inward remittances to Kerala can be affected significantly over the coming decade and more.
If we look a decade into the future, the Southern states except Kerala are poised for a breakout and big leap riding on manufacturing, logistics and value-added agriculture. The services sector and technology domain would also significantly grow and there would be digital and AI advancements across sectors. The only hope for Kerala is to change course and encourage and support investments by corporations and global entities.
There are many meaningful hints and lessons in the two charts shown here on the GDP and Per Capita divergence in the Southern States.
The question is, can Kerala change? Is there visionary, transformational leadership in the State in any political party who can be the change-maker? A Big Question Mark as of now
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