The Hindu Business Line : Remittances fuel consumption spree in Kerala

KERALA had all along been a huge consumer durables and perishables market for the country as a whole. But the per capita income of an average Keralite did not warrant such a high level of expenditure.

But, a recent study by the Centre for Development Studies as shown that it was the huge corpus of remittances coming into the State every year, which was sustaining this surging consumption. The study found that the per capita consumption in Kerala exceeded the national average by close to 50 per cent, which was not backed by any excess income generated within the State.

It was found that when remittances are added to the state's income, the per capita income for the state crossed the national average. This enabled the high level of consumption for the State.

The study, Kerala's Gulf Connection: Emigration, Remittances and their Economic Impact 1972 - 2000, by Mr K.P. Kannan and Mr K.S. Hari, found that by the early nineties, remittances to the Kerala economy assumed a significant share of the State income. From 17 per cent in 1991-92, remittances share in State income grew to 22 per cent during the late nineties.

By the end of the nineties, remittances were well above the total State Government expenditure, value addition in manufacturing and value addition in the State's industrial sector as a whole. There was also a significant growth in remittances during the period, which grew from Rs 1239.93 crore in 1989-90 to Rs 14,157 crore by 1999-2000.

The growth in remittances has been visible throughout the decade and there has been no major reversal. The fears of reverse flow of NRIs effecting remittances has been proven false. It is estimated that there are around 13.62 lakh people from Kerala working abroad. This constitutes almost 10 per cent of the total workforce of the State.