While others shine, Kerala tells a story of slipping GDP share

NEW DELHI: While all Southern states glittered in the recent GDP growth report presented by the Economic Advisory Council to the PM’s office, Kerala remained the lone outlier, telling a different story – one of losing GDP share.

In fact, Kerala’s share in the country’s total GDP had increased from 3.4 per cent in 1960-61 to peak at 4.1 per cent in 2000-01. But this littoral state’s share has since drifted down to 3.8 per cent in 2023-24.

South’s share at 30%

“Kerala is the only southern state that seems to be losing share,” the report noted. Overall, the southern states together accounted for 30.6 per cent of India’s GDP in 2023-24.

“This is indeed an encouraging trend for the South as a whole because the states here were not economically vibrant until a few decades ago,” an economist said while interacting with businessnessbenchmark.news.

The report stated that a notable development following the economic liberalisation is the emergence of southern states, especially Karnataka and Telangana as economic powerhouses.

Karnataka

Karnataka’s share in India’s GDP was 5.4 per cent in 1960-61, and it remained almost the same until 1990-91.

However, after the policy shift, the state saw rapid growth, with its GDP share rising to 6.2 per cent by 2000-01 and reaching 8.2 per cent by 2023-24.

This growth has positioned Karnataka with the third-largest share of India’s GDP.

Andhra Pradesh

The erstwhile Andhra Pradesh (Andhra Pradesh plus Telangana) now accounts for almost 9.7 per cent, a growth of  2.1 percentage points since 1990-91 with most of the increase in share being accounted for by Telangana.

After the bifurcation, share of Andhra Pradesh has remained broadly flat.

Tamil Nadu

Tamil Nadu also reversed its pre-1991 decline by increasing its share from 7.1 per cent in 1990-91 to 8.9 per cent in 2023-24, as discussed earlier.

Kerala per capita surges

Notwithstanding the fall in Kerala’s GDP share, the state’s per capita income has staged a smart growth to 152 per cent of national average in 2023-24.

“We understand the numbers may be an underestimate for Kerala as it always has been a big receiver of remittances, even in 1991,” the report highlighted.

It may be relevant to remember that per capita net state domestic product (NSDP) does not include remittances, which may be important for states like Kerala, Bihar and Uttar Pradesh.

From 74% to 153%

While in 1960-61 Kerala’s per capita income was only 84.6 per cent of the national average, it had gone down to 74.1 per cent in 1990-91, but has made a smart improvement thereafter to record 152.5 as of 23-24.

West Bengal’s loss

While the southern states have made a mark as major contributors to India’s GDP, states like West Bengal, once economically vibrant, have witnessed a puzzling decline, according to the working paper released by the Economic Advisory Council to the Prime Minister.