Despite leading in human development indices, Kerala's economic performance has been less than encouraging in recent years. According to the Reserve Bank of India’s Handbook of Statistics on Indian States 2023-24, Kerala ranked 30th out of 33 states and Union Territories (UTs) in terms of economic growth over the last five years.
Between 2018-19 and 2022-23, Kerala’s average annual growth rate (AAGR) in gross state domestic product (GSDP) at constant prices stood at 3.16%. Only Delhi, Uttarakhand, and Goa showed worse performance, with growth rates of 3.13%, 2.16%, and 0.70%, respectively. In contrast, states like Mizoram, Chhattisgarh, and Gujarat registered growth rates above 6%, with Mizoram leading at 6.75%.
Other southern states, such as Karnataka, Telangana, Tamil Nadu, and Andhra Pradesh, saw comparatively higher growth during this period, with Karnataka's economy expanding by 5.62%, while Telangana, Tamil Nadu, and Andhra Pradesh posted growth rates of 5.61%, 5.27%, and 5.19%, respectively.
Kerala’s GSDP improved to Rs 6.35 lakh crore in 2023-24, reflecting a 6.52% year-on-year (YoY) growth, up from Rs 5.96 lakh crore in the previous year (+4.24% YoY). GSDP stands for Gross State Domestic Product. It is the total monetary value of all goods and services produced within a state's borders over a specific period, usually a year. GSDP is a key indicator used to measure the economic performance of a state, similar to how GDP (Gross Domestic Product) is used for a country.
However, the growth rate is still relatively modest when compared to the remarkable progress observed in other states. For instance, Telangana’s growth rate was pegged at 9.24%, with Tamil Nadu at 8.23% and Andhra Pradesh at 7.35%.
While Kerala has excelled in important social indicators, such as maternal mortality and life expectancy, other indicators present a mixed picture. The state recorded the highest maternal mortality rate in the country, at 19 deaths per 100,000 births, and its infant mortality rate of six deaths per 1,000 is the fifth lowest. However, unemployment rates in rural Kerala remain high, ranking fourth in the country at 76, while urban unemployment saw improvement, decreasing from 104 in 2019-20 to 67 in 2023-24.
The Handbook also highlighted an exponential increase in the state's expenditure on disaster relief. Kerala's spending in this area rose by 232%, from Rs 14,181 lakh in 2011-12 to Rs 47,060 lakh in 2023-24, with the highest expenditure occurring in 2018-19 due to floods, totalling Rs 3,13,376 lakh.
In the state's financial sector, Kerala saw an increase in its own tax and non-tax revenue. The state’s own tax revenue jumped from Rs 58,341 crore in 2021-22 to Rs 70,189 crore in 2022-23, with a projected estimate of Rs 81,039 crore for 2023-24. Non-tax revenue also saw a rise, from Rs 10,463 crore in 2021-22 to Rs 15,355 crore in 2022-23, with an estimated Rs 17,089 crore in 2023-24.
However, Kerala's pension expenditure remains one of the highest in the country, with a notable rise from Rs 26,689 crore in 2022-23 to Rs 28,240 crore in 2023-24, marking a continued strain on the state's finances.