KERALA September 2009
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KERALA September 2009 1 KERALA September 2009 Investment climate of a state is determined by a mix of factors • Skilled and cost-effective labour • Procedures for entry and exit of firms • Labour market flexibility • Industrial regulation, labour regulation, • Labour relations other government regulations • Availability of raw materials and natural • Certainty about rules and regulations resources • Security, law and order situation Regulatory framework Resources/Inputs Investment climate of a state Incentives to industry Physical and social infrastructure • Tax incentives and exemptions • Condition of physical infrastructure such as • Investment subsidies and other incentives power, water, roads, etc. • Availability of finance at cost-effective terms • Information infrastructure such as telecom, • Incentives for foreign direct investment IT, etc. (FDI) • Social infrastructure such as educational • Profitability of the industry and medical facilities 2 KERALA September 2009 The focus of this presentation is to discuss… Kerala‘s performance on key socio-economic indicators Availability of social and physical infrastructure in the state Policy framework and investment approval mechanism Cost of doing business in Kerala Key industries and players 3 PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS Kerala September 2009 Kerala‘s economic performance is driven by the secondary and tertiary sectors Kerala‘s GSDP (US$ billion) • Kerala‘s GDP grew at a CAGR of 13.5 per cent between 1999-00 and 2007-08 to reach US$ 40.4 billion. • The secondary sector has been the fastest growing sector, at a CAGR of 14.5 per cent, driven by manufacturing, construction, electricity, gas and water. • The tertiary sector, the largest contributor to Kerala‘s economy, grew at a rate of 12.5 per cent in 2007-08 over the previous year; it was driven by trade, hotels, real estate, transport and Percentage distribution of GSDP CAGR communications. 6.07% • The primary sector‘s share in the GSDP has been declining; however, mining and quarrying registered 14.45% a high growth rate of 39.8 per cent in 2007-08 over the previous year. 12.10% Source: Ministry of Statistics and Programme Implementation; Economic Review of Kerala, 2008 4 PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS Kerala September 2009 Households have higher disposable incomes and higher level of education…(1/3) • The per capita income of Kerala was US$ 1,040 in Percentage distribution of urban households by SEC* 2007-08 as compared to all-India average of US$ 850. • Distribution of households by socio-economic classification (SEC) shows that Kerala has a higher percentage of urban households with education as compared to the all-India average; in rural households, too, the level of education is higher than the all-India level. Percentage distribution of rural households by SEC Urban Rural (in %) Source: BW Marketing Whitebook, 2009-10 (in %) *See Annexure for SEC Classifications 5 PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS Kerala September 2009 Households have higher disposable incomes and higher level of education…(2/3) • In ownership of household goods such as four-wheelers and consumer electronics and amenities such as electricity, Kerala is ahead compared to the all-India average. Percentage ownership of household goods, vehicles and electricity consumption Percentage of households with four-wheelers Percentage of households with TV Percentage of households with electricity Percentage of households with two-wheelers 6 PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS Kerala September 2009 Households have higher disposable incomes and higher level of education…(3/3) • In ownership of household goods and Percentage of rural population owning household goods and basic amenities amenities such as clocks, ceiling fans and in- house toilets, rural Kerala is ahead as compared to all-India levels. Source: BW Marketing Whitebook 2009-10 7 PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS Kerala September 2009 Manufacturing plays a vital role in Kerala‘s economy • Kerala‘s traditional industries include handloom, Key industries in Kerala cashew, coir and handicrafts. Handlooms and power looms Rubber • In terms of industrial growth, the state‘s average growth from 1999-2000 to 2007-08 was 4.9 per cent. Bamboo Coir • As of March 2009, there were 730 large and medium Khadi and village industrial undertakings in Kerala, of which 600 units Sericulture are in the private sector. Seafood and other marine products Cashew • The small scale sector contributes 40 per cent to industrial production and 35 per cent to exports. Beedi Mining • Around 195,960 working small scale industry (SSI) Tourism units were registered in Kerala as of March 2008. Food processing Spices and spice extracts 8 PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS Kerala September 2009 Kerala has witnessed a strong inflow of investments in the services sector • As of December, 2008, the outstanding* Break up of investments by sector investments in the state amounted to US$ 29 Construction, billion, with the services sector accounting for 12.2% a major amount of the investments. Irrigation, Manufacturing, 0.9% 22.5% • Between April 2000 and June 2009, the cumulative FDI inflow in the State was US$ Mining, 0.8% 261.75 million. Electricity, 12.4% • Recent large investments in the state have Services, flowed to The Integrated Infrastructure 51.3% Development Centre and the International Apparel Park, the video and film park, Source: CMIE International Convention Centre, Technocity, Technopark Phase III, and Vizhinjam Deep Water Port. *Outstanding investments include new projects and those under implementation, but not projects shelved 9 PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS Kerala September 2009 Key industrial groups present in the state District Industries Kannur Handlooms, power looms, beedi Allepey Coir products Idukki Agriculture and forest based Thiruvananthapuram Handlooms Thrissur Power looms, handlooms, textile, timber, tile, canning Palakkad Power looms, sericulture Kollam Minerals and mining Kozhikode Rubber Wayanad Minerals and mining Kasargod Minerals and mining Kottayam Rubber, food products, engineering Ernakulam information technology 10 KERALA September 2009 The focus of this presentation is to discuss… Kerala‘s performance on key socio-economic indicators Availability of social and physical infrastructure in the state Policy framework and investment approval mechanism Cost of doing business in Kerala Key industries and players 11 AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE Kerala September 2009 Skilled as well as unskilled labour is available in the State • Ample workforce availability makes Kerala an Number of persons attractive investment destination. S No Industry employed as of 2008 1 Agriculture and allied industries 80,080 • The share of female employees in Kerala is 31 per cent in public sector and 50 per cent in the private 2 Mining and quarrying 4,243 sector. 3 Manufacturing 255,095 4 Construction 21,348 • According to the Centre for Development Studies, migration from Kerala to foreign countries, Electricity, gas, water and particularly to the Gulf countries is high; this results 5 sanitary 24,270 in foreign remittances to the state economy. services 6 Trade, restaurants and hotels 38,121 Transport, storage and • Migration from Kerala to other states in India has, 102,889 7 communication however, registered a significant decline. Financing, insurance, real estate 86,081 8 and business services Community, social and personal 505,290 9 services Total 1,117,417 Source: Directorate of Employment and Training 12 AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE Kerala September 2009 Social infrastructure (educational and medical institutions) in the state is strong…(1/2) Educational infrastructure Educational infrastructure* • The literacy rate in Kerala is the highest among Indian states —about 91 per cent as compared to the all Schools 12,644 India literacy rate of 65.4 per cent. Universities 7 • Kerala‘s budgeted expenditure on education in 2008- Engineering institutions 84 09 was US$ 1.3 billion. Other graduation colleges 189 ITI 34 Source: Economic Review of Kerala, 2008 *As of March 31, 2008 13 AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE Kerala September 2009 Social infrastructure (educational and medical institutions) in the state is strong…(2/2) Medical infrastructure Kerala All-India • Kerala has 929 primary health centres, 5,094 sub- Birth rate* 14.7 23.1 centres and 114 community health centres. Death rate* 6.8 7.4 • There are 136 hospitals with 23,871 beds under the Directorate of Health Services. Infant mortality rate** 13.0 55.0 *Per thousand persons • The state has low death rate and declining birth rate leading to a slowdown in the population growth rate. **Per thousand live births Life expectancy at birth (years) • The state exhibits better health ratios as compared to the national average. Male 71.3 62.3 Female 76.3 63.9 Total fertility rate 1.7 2.9 (per woman) Source: Economic Review of Kerala, 2008 14 AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE Kerala September 2009 Transport infrastructure is adequate…(1/2) Roads Civil Aviation • Kerala has a total road length of 173,592 km; road • Kerala has three airports - at density in the state is 446 km per 100 sq km; there Thiruvananthapuram, Kochi (Nedumbassery) are eight national highways in Kerala with a total road and Kozhikode (Calicut) handling both length of 1,524 km. international