FOREWORD

TheThe last year, 2017-18, has been eventful for the Indian economy. Demonetisation continued to affect economic growth rates adversely. In addition, resource mobilisation has slowed down in the wake of the implementation of Goods and Services Tax. A crisis of agricultural incomes continues to prevail in large parts of India’s countryside. The economy of the State of Kerala could not but be affected by these events.

Kerala’s economy is integrally linked to the world economy. Changes in the global economy are transmitted to the Kerala economy by means of changes in the volume of remittances, in the export of services and in commodity prices. The global economic environment has continued to be adverse for Kerala’s regional economy. The world economy continues to record low growth rates. The recovery from the global economic and financial crisis of 2008 has been slow in most developed capitalist economies. Even where there has been some recovery in output, there has not been corresponding recovery in terms of employment expansion. As a result of these developments, the prospects for increased absorption of exports from the less-developed countries by the advanced capitalist economies are not very encouraging. This global situation calls for counter-cyclical domestic economic policy: a focus on the expansion of domestic public investment in physical and social infrastructure in order to raise aggregate demand and crowd in investment. As we are aware, however, this has not been the policy orientation of the present (or previous) Government of India. The economic strategy of the central government has been deflationary, particularly in the last year.

In the absence of counter-cyclical public investment policy at the centre, the State government needs to step in. Changes in Centre-State fiscal relations brought about by policies of the Government of India have affected the fiscal space of the State adversely. The freedom of States to raise resources has further been restricted by the introduction of GST. As the report of the Committee on the Impact of Demonetisation on Kerala’s Economy appointed by the State Planning Board pointed out, purchasing power and economic activity in the State, particularly in the traditional sectors and in the cooperative banking sectors, were severely affected by demonetisation.

Economic Review 2017 reflects comprehensively on the impacts of these developments as well as the interventions made by the State Government in various sectors over the last year. The growth rate in the economy, both national and State, in 2016-17 was around 7 per cent. The tertiary sector has been the driving force of economic growth in the State. Although positive signs of growth are visible in the agriculture sector, this growth must be characterised as inadequate. The situation was exacerbated by drought in Kerala in 2017. In the industrial sector, public sector undertakings under chemical and electronic sectors are being transformed from loss-making to profit-making enterprises. Steps have also been initiated to improve the image of State as an investment destination.

Kerala was declared the first digital State in the country in February 2016. The Government’s Information Technology Policy of 2017 aims to achieve a total digitally literate society. In the field of education, a significant achievement has been the increase in enrolment in Government schools. The success of the State’s major scheme for the elderly population, Vayomithram, has been acknowledged by Government of India.

The second phase of democratic decentralisation in Kerala has been initiated with the introduction of a new set of guidelines for the formulation and implementation of the Local Government plans. An important objective of the new guidelines was to simplify the procedures so that delays in implementation can be avoided. As a result of the introduction of the new methodology, all Local Governments in the State completed the process of formulation of their Annual Plans for 2017-18 before June 15, 2017. This is an unprecedented achievement in the history of local level planning in the State.

The theme chapter of Economic Review 2017 is entitled "Towards a Clean Kerala." One of the important aims of the Government is to provide a clean environment to all its residents. We need to plan for a litter-free Kerala. The theme chapter touches upon the state of sanitation and environment in the State, the measures undertaken in this regard, the lessons learnt from various experiments and the way forward. Kerala is one of the three States to have been declared "Open-Defecation Free."

A novel feature of this years' Review is that we have introduced new sections on ageing and skill development, keeping in view the relevance of these issues in the current context.

The Economic Review 2017 includes recent data, policies and programmes of the Government departments. It provides an insight into the development strategies of various sectors, the performance achieved under the plan schemes and the issues to be addressed in the coming years. As in previous years, the Review is presented in two volumes. Volume I covers the policies, programmes, and achievements of the Government departments in 2016 and Volume II provides the corresponding datasets. Economic Review 2017 is published in English and Malayalam. A digital version will be uploaded at the State Planning Board website www.spb.kerala.gov.in.

Thiruvananthapuram
January 16, 2018