Question

What dual pattern of development has Kerala experienced over the last fifty years?

• A. Rapid growth in agriculture and slow growth in the service sector.
• B. Sluggish growth in the service sector and rapid growth in industry.
• C. Sluggish growth in real sectors (agriculture and industry) and rapid progress in the service sector.
• D. Balanced growth across all economic sectors.

Answer 1

Answer:

C. Sluggish growth in real sectors (agriculture and industry) and rapid progress in the service sector.

Understanding Kerala's Dual Development Pattern

• The Kerala Model of Development is a unique socio-economic phenomenon characterized by high social development indicators (like literacy, health, and low infant mortality) comparable to developed nations, despite having a relatively low per capita income.
• Over the last five decades, Kerala has exhibited a distinctive dual pattern of economic development. This refers to the significant disparity in growth rates between its primary and secondary sectors (agriculture and industry) and its tertiary sector (services).

Sluggish Growth in Real Sectors (Agriculture and Industry)

• Agriculture:
  • Historically, agriculture was the backbone of Kerala's economy. However, its growth has been consistently sluggish.
  • Key reasons include: land reforms (which, while socially equitable, led to land fragmentation), increasing labor costs, shift from traditional food crops to cash crops, natural calamities, and lack of adequate investment in modernizing farming practices.
  • This has led to a significant decline in its contribution to the Gross State Domestic Product (GSDP) and an increasing dependence on other states for food grains.
• Industry:
  • The industrial sector in Kerala has also experienced slow growth, often termed as 'industrial backwardness' relative to its potential.
  • Factors contributing to this include: high wage rates, frequent labor disputes (popularly known as 'hartals' and 'bandhs'), perceived unfavorable investment climate, limited availability of raw materials for heavy industries, and insufficient power infrastructure.
  • Despite initiatives to promote industries, the manufacturing sector's contribution to employment and GSDP remains comparatively low.

Rapid Progress in the Service Sector

• The service sector has emerged as the dominant economic driver in Kerala, witnessing rapid and robust growth.
• Key components of this growth include:
  • Education: Kerala boasts the highest literacy rate in India (over 93% as per 2011 census), leading to a highly skilled human resource pool. This has fostered growth in educational institutions and related services.
  • Health: The state has an excellent public health system, contributing to low infant mortality rates (IMR) and high life expectancy. This has spurred the growth of healthcare services, including medical tourism.
  • Tourism: With its diverse natural beauty (beaches, backwaters, hill stations) and rich cultural heritage, tourism has become a major revenue generator and employer.
  • IT and ITES (Information Technology Enabled Services): Government initiatives like Technopark (Thiruvananthapuram) and Infopark (Kochi) have positioned Kerala as an emerging IT destination, attracting investments and creating jobs.
  • Trade, Hotels, and Restaurants: Supported by consumption driven by remittances and tourism.
  • Financial Services: Growth in banking, insurance, and other financial intermediaries.
• Remittances from Overseas Migrants: A crucial factor fueling the service sector growth is the substantial flow of remittances, primarily from Keralites working in the Gulf Cooperation Council (GCC) countries. These remittances boost consumption, leading to demand for housing, trade, finance, and other services.

Implications for Competitive Exams

• Kerala's development model is often cited for its focus on human development indicators (HDI) over purely economic growth.
• The state consistently ranks highest in India for literacy, life expectancy, and lowest in infant mortality rates (IMR) and maternal mortality rates (MMR).
• The large contribution of the service sector and remittances to GSDP makes Kerala's economic structure distinct from other Indian states.
• The challenge for Kerala is to achieve a more balanced growth by boosting its productive real sectors while maintaining its social welfare achievements.