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Thiruvananthapuram , Dec. 14

HIGH levels of per capita consumption coupled with lack of entrepreneurship within has made Kerala the happy hunting ground of multinationals and manufacturers from other parts of the country.

The entrepreneurs in the State produce only a handful of food and non-food items and most of these are characterised by low technology, low investment and marginal value-addition.

So much so, Kerala, despite its significant achievements in the social sectors, remains poorly equipped to respond positively to the challenges of globalisation.

As per the latest figures arrived at by the National Sample Survey Organisation (NSSO), Kerala topped in per capita consumer expenditure at Rs 9,843.55 in 1999-2000, improving from the eighth position in 1972-73 and second position in 1993-94.

Unofficial estimates also show that Keralites, who form nearly 3.5 per cent of the country's population, consume almost 10 per cent of the consumer goods produced in the country.

According to a paper brought out by Mr Jose Sebastian of the Institute for Enterprise Culture and Entrepreneurship Development, the consumption boom in the State has made it the mainstay of manufacturers from other parts of the country.

A major reason for the growing consumption is the remittances flowing into the State and not the income generated within. It is estimated that the external remittances account for as much as 20 per cent of the State Domestic Product.

Analysing the trend in consumption, Mr Sebastian says that readymade garments with a share of Rs 412.31 crore top the chart, followed by medicines with Rs 405.75 crore. The share of some of the other goods are: Sarees (Rs 365.09 crore), washing soap and other washing products (Rs 355.87 crore), toilet soap (Rs 269.91 crore), cloth for shirt, pyjama and salwar (Rs 224.86 crore), hair oil, shampoo, lotion and hair cream (Rs 174.46 crore) and tooth brush and paste (Rs 149.66 crore).

In the food items sector, there is a high degree of concentration in low technology products such as cereal powders, curry powders, pickles and jams.

On the other hand, the number of players in technology-intensive product lines such as desiccated coconut, oleoresins and coconut milk is very limited.

As compared to the food sector, the presence of local entrepreneurs in the non-food sector is very poor. Even in product lines, in which several Kerala brands exist, their combined market share is nowhere near the market share of giants from outside the State.

A case in point is footwear production where there are 19 brands within the State. But, three or four brands from the other States command a much higher market share than all the Kerala brands put together.

Mr Sebastian notes that some of the reasons for low entrepreneurship in the State are preoccupation with redistribution, aversion for taking risks and preference for secure employment, lack of confidence to innovate, child rearing practices, poor self-esteem of entrepreneurs, lack of business culture built on mutual trust, unsympathetic and unsupportive bureaucracy and the labour laws and institutions that are heavily biased against the entrepreneur.

But, as against these negative aspects, the potential for growth of entrepreneurship in the State is tremendous.

The nearly 40-lakh unemployed youth registered with the employment exchanges in Kerala is more than enough to produce within even half of the products imported into the State, says Mr Sebastian.

Another positive factor in this respect is the low credit-deposit ratio which indicates that the banks are flooded with funds. What is required is the right kind of interventions that can fundamentally alter the cultural dimensions inimical to wealth creation and enterprise, says the paper.

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