The share of the tertiary sector in income increased from 40 per cent in 1983 to 55 per cent in 2000.

Mony K. Mathew

Thiruvananthapuram, April 11

The tertiary sector has been the leading growth driver of Kerala's economy with its share in the Net State Domestic Product (NSDP) increasingly dramatically since the mid-80s.

According to the latest Human Development Report prepared by the Centre for Development Studies, the tertiary sector has been the major contributor in terms of both income and employment, followed by the primary sector.

While primary sector recovered between the period between 1988 and 2003, after registering negative growth between 1970 and 1987, it does not hold the promise of propelling higher economic growth from a long-term perspective, the report said.

During the period between 1970 and 1987, the tertiary sector recorded growth rate of 3.3 per cent; within the sector, banking and insurance, public administration, and transport and communications, in that order, registered higher growth rates.

In the second period between 1988 and 2003, the growth was led by transport and communications, followed by banking and insurance.

Increase in share

The share of the tertiary sector in income increased from 40 per cent in 1983 to 55 per cent in 2000, while in the sphere of employment, its share grew from 28 per cent to 40 per cent.

The annual growth rate of the State's NSDP increased from 1.9 per cent during 1970-1987 to 5.8 per cent during 1988-2003.

More interestingly, the State's growth rate, which was half the all-India figure in the first period, caught up with the national figure in the second period.

Better than national rate

The per capita NSDP of Kerala, which had been consistently below that of the all-India level, increased at a much faster rate in the 90s.

From 1993-94 onwards, the State's economy has been performing much better than the all-India level in terms of per capita NSDP.

It is significant that the estimates of NSDP and per capita NSDP do not factor in the remittance income of non-resident Keralites.

Overseas remittances

If these remittances were taken into account, the State's NSDP and per capita NSDP would be much higher than the official estimates, the report said.

Remittances to the Kerala economy ranged from 17 per cent during 1991-92 to 24 per cent during 1997-98, with an average of 21 per cent between 1992 and 2000.

The modified per capita NSDP (including remittance income) grew at an annual rate of 6.86 per cent between 1987 and 2003, which was much above that of the official NSDP.

(This article was published in the Business Line print edition dated April 12, 2006)
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