Kerala - Thiruvananthapuram   

Economic Review pegs GSDP growth at 9.73%

THIRUVANANTHAPURAM: The Gross State Domestic Product (GSDP) of Kerala at factor cost at constant prices (2004-05) is estimated to have grown by 9.73 per cent in 2009-10, according to the annual Economic Review presented in the Assembly on Wednesday.

This is an improvement over the GSDP growth of 7.22 per cent recorded in the recession year of 2008-09. It also compares favourably with the estimated growth rate of 7.4 per cent in the Gross Domestic Product of the country in 2009-10. Kerala is continuing the recent trend of maintaining a higher growth rate than the all-India average.

The tertiary sector (which accounted for 66.28 per cent of the GSDP) recorded an estimated growth rate of 11.51 per cent in 2009-10. The secondary sector (which accounted for 21.71 per cent to the GSDP) grew by an estimated 9.43 per cent and the primary sector (which accounted for 12.01 per cent of the GSDP) by an estimated 1.27 per cent.

Different approach

The review said it was significant that Kerala's economy had performed well even by conventional criteria like GSDP growth rate although its approach was different from neo-liberalism. “Kerala's GSDP growth rate during every single year of the first four years of the 11 {+t} {+h} Plan has been higher than the GDP growth rate of the country as a whole,” the review said.

The key fiscal indicators of the State were, however, estimated to further deteriorate in 2009-10 compared to the recession year of 2008-09 because of increased expenses, including the expenses on anti-recession measures. The revenue deficit in 2009-10 increased by 35 per cent compared to the previous year (to the level of Rs.5,022.97 crore) and the fiscal deficit by 24 per cent (to the level of Rs.7,871.6 crore).

Growth

The review noted that the growth recorded by the domestic economy helped “moderate a sharp increase in revenue and fiscal deficits as a ratio to the GSDP…. The fiscal deficit to GSDP ratio, which had declined from 3.48 per cent in 2007-08 to 3.16 per cent in 2008-09, increased to 3.42 per cent in 2009-10. The quality of fiscal deficit also deteriorated. While 58 per cent of the fiscal deficit was utilised for financing revenue deficit in 2008-09, the share increased to 63 per cent in 2009-10.”

Total expenditure, which had increased in comparison with the previous year's by 13.36 per cent in 2008-09, grew only by 10.24 per cent in 2009-10. However, the decline in the year-to-year growth of revenue was sharper than the decline in growth of expenses. Growth in revenue (in comparison with the previous year's) came down from 16.13 per cent in 2008-09 to 6.52 per cent in 2009-10.

The review said the debt burden of the State was an issue of concern. It had gone up from Rs.20,176.1 crore in 1999-2000 to Rs.70,969 crore in 2009-10.

The debt to GSDP ratio indicated the extent to which a State economy can sustain its debt. The accepted norm was to keep it below 30 per cent. State's debt, which was as high as 35.11 per cent of the GSDP in 2004-05, had come down, however, to 30.81 per cent in 2009-10.

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