Economy of Kerala

[Clottie]

Kerala's economy largely operated under welfare based democratic socialist principles. In recent years, the state has liberalized its increasingly mixed economy, allowing greater participation by the free market and foreign direct investment. Nevertheless, relatively few major corporations and manufacturing plants choose to operate in Kerala. This is mitigated by remittances sent home by overseas Keralites, which contributes around 20% of state GDP. Kerala's per capita GDP of 11,819 INR is significantly higher than the all India average, although it still lies far below the world average. Additionally, Kerala's Human Development Index and standard of living statistics are the nation's best. This apparent paradox high human development and low economic development is often dubbed the Kerala phenomenon or the Kerala model of development, and arises mainly from Kerala's strong service sector.

Interior of the Techno Park, Thiruvananthapuram.Traditional industries manufacturing such items as coir, handlooms, and handicrafts employ around one million people. Around 180,000 small-scale industries employ around 909,859 Keralites; 511 medium and large scale manufacturing firms are located in Kerala. Kerala's unemployment rate is variously estimated at 19.2% and 20.77%, although underemployment of those classified as "employed", low employability of many job-seeking youths, and a mere 13.5% female participation rate are significant problems. Estimates of the statewide poverty rate range from 12.71% to as high as 36%.

Real estate is, by its nature, an expensive non-liquid asset. This means that it costs a lot of money to own it, and it can be difficult to sell. In development activity, there are also the added costs of improvements themselves (typically called "hard costs") and the fees of various and sundry consultants necessary to get the work done properly (typically called "soft costs"). Because expense is high, sale is difficult, and return on investment is delayed, real estate investment is inherently risky. A large part of the work of developers is the management of risk. Builders in Kerala acquire raw land, improved land, and/or redevelopable property in order to construct building projects. The buildings are then sold entirely or in part to others, or retained as assets to produce cash flow via rents and other means. Some building developers have their own internal departments for designing and constructing buildings, while others subcontract these parts of the work to third parties.