Kerala 2005 - of Planning Commission

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Table 3.5: Structural Transformation
of the Kerala (and All India)
Economy as Seen Through Sectoral Shares
of Income and Employment
Year Primary Secondary Tertiary
1983
Income 35 (41) 25 (22) 40 (37)
Employment 50 (69) 22 (13) 28 (18)
1987-88
Income 35 (35) 22 (24) 43 (41)
Employment 52 (66) 20 (15) 28 (19)
1993-94
Income 32 (33) 20 (24) 48 (43)
Employment 49 (65) 21 (14) 30 (21)
1999-00
Income 26 (28) 19 (24) 55 (48)
Employment 32 (60) 28 (16) 40 (24)
Note: Figures in parenthesis gives the all India figures.
Source: For income: Government of India (2003).
For employment: For Kerala: NSSO, Report No.341/3, Report on the Third Quinquennial
Survey on Employment and Unemployment, February 1988, Sarvekshana, Special
Issue, State Series, Kerala, January 1992, NSSO Report No.409, Report on the Fifth
Quinquennial Survey on Employment and Unemployment in India, March 1997 and
NSSO Report No.458, Report on Sixth Quinquennial Survey on Employment and
Unemployment in India.
For All India 1983: Sarvekshana Issue No.35, 11(4), April 1988. For 1987-88:
Sarvekshana, Special Number, September 1990. For 1993-94 and 1999-00:
Same as Kerala.
Thus, our analysis shows that both in terms of rates of
growth and share of NSDP as well as employment, the
tertiary sector has dominated since the 1980s and this has
further strengthened in the 1990s. The State has certainly
moved towards a non-agricultural economy; however,
its path has not been conventional.
2.7 Sectoral Contribution to Aggregate Growth
To further identify the leading sectors of the economy,
we adopt a simple growth accounting methodology
by decomposing the NSDP growth rate. 8 It can be
safely concluded that the growth revival in the Kerala
economy during the 1990s, as reflected in the growth
rate of NSDP, is largely accounted for by the tertiary
sector, which contributes more than half (Table 3.6).
This is true for Period 1 also, when the primary sector
contribution was negative. What is more significant
is the revival even in the primary sector in Period 2.
Table 3.6: Sectoral Contribution to
NSDP/GDP Growth Rate (%)
Sectors Kerala India
Period 1 Period 2 Period 1 Period 2
Primary -4.23 14.02 27.55 17.44
Secondary 33.62 21.86 26.51 26.52
Tertiary 70.61 64.12 45.95 56.04
Source: Estimated using data from CSO, National Accounts Statistics,
various issues.
To sum up: The Kerala economy did experience
an all-round revival during Period 2; its per capita
NSDP was also higher than the all-India average. The
inclusion of remittances, however roughly estimated,
raises per capita NSDP even higher. We also found
that this resurgence in growth was mainly contributed
by the growth of the tertiary sector, which accounts
for more than 50 per cent of the NSDP’s growth and
absorbs a major share (40 per cent) of the work force;
it continues to be the leading sector of growth. We
can categorise the Kerala economy’s service sector
growth as follows: Service sector covers a broad
spectrum of activities, some conducive to production,
some to consumer satisfaction or an amalgam
of the two. It is an engine of growth or necessary
concomitant of growth resulting from the growth
of skill intensive, high value added sectors such as
software, communications, financial services, etc.
It is also reflective of a mutation of growth – it is
a sector that absorbs the shocks of the agricultural
and industrial sectors leading to the growth of
low-skilled service activities. That there has been
considerable dynamism in its growth will become
clearer from Chapter 5; here we continue with the
income dimension of development, more precisely,
its deprivation, that is income poverty.
3. Poverty
3.1 Income Poverty
Kerala has made substantial progress in reducing the
incidence of both rural and urban poverty. Between
1957-58 and 1993-94, the headcount index of poverty
in rural Kerala declined at an average annual rate of
2.4 per cent, the maximum achieved among 15 major
Indian States (World Bank 1997:8).
8 The growth rate decomposition is given by gv =∑pi gvi where gvi and gv are the growth rates of Vi (sectoral output) and V (total
output) respectively and the weights are sectoral output shares pi =Vi/V (Syrquin, 1988).respectively and the weights are sectoral
output shares pi =Vi/V (Syrquin, 1988).