THIRUVANANTHAPURAM: The growth rate of Kerala economy plummeted to 3.45% in FY 2019-20, which suggests that the downward rally of state’s growth happened even before the outbreak of Covid-19. The economic review, presented in the assembly on Thursday a day before the presentation of LDF government’s last budget, illustrated the severe financial stress Kerala was bearing well before the pandemic began while also indicating grimmer challenges in future.
Kerala’s gross state domestic product (GSDP) in 2019-20 was Rs 5.68 lakh crore against the provisional estimate of Rs 5.49 lakh crore in 2018-19, thus registering a growth of only 3.45% in 2019-20, compared to 6.39% growth in 2018-19.
Finance minister TM Thomas Isaac and state planning board vice-chairman VK Ramachandran in a joint news conference, attributed the sharp decrease in economy’s growth to multiple factors, including demonetisation by the Centre in 2016 and natural disasters like cyclone Ockhi and two consecutive floods in 2018 and 2019.
“The deferred effect of Ockhi and the floods can be observed in the slow grow rate Kerala registered in 2019-20. The country and the state were sliding into an economic recession well before the pandemic hit the Indian economy as a result of demonetisation and other things,” said Isaac.
At the same time, the economic review for the last fiscal claimed that the state had been on a revival path from 2016 to 2018, revising a downward slide in state’s economy between 2013 and 2015.
For example, the rate of growth of Gross State Value Added (GSVA) – the measure of value of goods and services – in the state was 4.3%, 3.8% and 5.3% respectively in the years 2013-14, 2014-15, and 2015-16 respectively. It was significantly slower than the corresponding national average. “Ending this phase of stagnation, Kerala’s economic growth accelerated in 2016-17, with GSVA recording 7.1% growth in that year,” said the economic review.
It may be noted that demonetisation was introduced in 2016. The rate of growth of GSVA in Kerala were 5.8% and 6.2% respectively in 2017-18 and 2018-19. “It is notable that in 2018-19, the growth rate in Kerala exceeded the corresponding national rate. But, GSVA growth in Kerala slowed down to 2.6% in 2019-20,” stated the review document.
The economic review attributed the growth rate from 2016-17 to 2018-19 to the fast growth in sectors like fishing and aquaculture, manufacturing, trade, hotels and restaurants, social services; mainly education and health, public and professional services.
However, the outbreak of Covid-19 adversely affected economic activities in state, and effects of the pandemic and the consequent lockdown was reflected in the growth estimates for 2019-20, the review document said.