Kerala Clocks Strong Industrial Growth, Focus on Diverse MSMEs to Sustain Growth
Representational Image. Image Courtesy: PTI
Kerala has recorded an impressive industrial growth rate of 17.3% in the financial year 2021-22. The achievement of the manufacturing sector is even more impressive, recording a growth rate of 18.9%, slightly higher than the national level growth of 18.16%.
These achievements helped the state register an economic growth of 12.01% in 2021-22 compared to (-) 8.43% in the previous financial year.
The road map laid by the Left Democratic Front (LDF) government in the 13th five-year plan from 2017 to 2022, with 'Increasing material production in agriculture and industry' as one among the nine strategies adopted in the plan has reaped rich dividends for the economic growth.
The economic review report for the current financial year has reported a strong recovery in diverse sectors in the post-COVID period. The survey also pointed to the state's achievements in the manufacturing sector in the revival of the economy. The contribution in the gross state value added (GSVA) increased from 9.8% in 2014-15 to 11% in 2019-20.
The LDF government had rolled out several measures to improve the investor climate in the state besides resurrecting the state-owned public sector undertakings (PSU). The growth in information technology (IT) export, among other factors, have played a crucial part in the reported growth.
The 14th five-year plan to sustain and improve industrial growth has concentrated more on the modern MSMEs, strengthening PSUs, and focusing on traditional and modern technological and infrastructural development.
'PERCEPTION CHANGED OVER YEARS'
The quick estimates for the industry sector registered a growth of 17.29% in the quick estimates for 2021-22 from (-)2.09% (provisional estimates)in the previous financial year. The last five years have been testing times for the state, considering the floods for two successive years, the Nipah outbreak and the COVID-19 pandemic.
The post-COVID period has been rosy for the state, with improved performances in diverse industrial sectors, including manufacturing.
"Kerala's industrial growth rate was at a record high of 17.3% in 2021-22," quipped P Rajeev, the minister for industries in the LDF government.
Recent years have seen an increase in investments in Kerala, with the economic survey report claiming that "the state has achieved substantial progress concerning modernising and diversifying its industrial sector."
"Kerala's share of Gross value added (GVA) by India's factory sector increased during this period indicating a higher growth than all India average," said V Namasivayam, member of the State Planning Board. The share of the factory sector has increased from 1.2% in 2014-15 to 1.52% in 2018-19.
'ECONOMIC PLANNING AND ACHIEVEMENTS'
Even though the Bharatiya Janata Party (BJP) led Union government scrapped the five-year plans, the LDF government in Kerala has committed itself to continuing the planning process. The efforts to resurrect the industrial sector in the 13th five-year plan have reflected in the state's growth.
Kerala has been branded as a state not conducive to investing, but things have drastically changed in recent years. The annual plan for 2020-21 is rooted in sustainable livelihoods to overcome the COVID-19 crisis, as per the Economic Review Report 2021.
The 13th five-year plan adopted a strategy on Traditional Industries, Food Industries, and Other Agro-Based Industries, Public-sector undertakings and high-technology enterprises and promoting entrepreneurship.
Several measures to address the apprehensions of the entrepreneurs in ensuring the smooth processing of obtaining licences within a short time, redressal mechanisms, and subsidies have played an important role in changing the perception about the state not being investment friendly.
The introduction of the Kerala Investment Promotion and Facilitation Act, 2018, Kerala Single Window Interface for Fast and Transparent Clearance (KSWIFT) and Investment Promotion and Facilitation Cells made investing in the state a smooth process.
"The Plan also gave emphasis on promoting agriculture production and ensuring sufficient income for the farmers, generating employment through promoting industrial production, especially MSME units in the State, and reviving the economy to spur growth and production", the report said.
The last few years saw massive investments in infrastructure, with 955 projects being approved worth Rs 50,762 crore till March 2022.
'THRUST ON MSME SECTOR
The 14th five-year plan has proposed strengthening the existing industrial base and protecting existing employment. The government has also published a draft Industry Policy for public opinion.
"The policy provides a long-term framework for the industrial development of Kerala. In the setting of the new industrial strategy arising out of the Draft Industrial Policy, the Government of Kerala has declared the Financial Year 2022-23 as the Year of Enterprise," Namasivayam said.
The ambitious project launched by the LDF government with the aim of starting 1 lakh MSMEs has led to the formation of around 1.34 lakh enterprises with an investment of Rs 8110 crore and 2.87 lakh employment.
The government has chipped in with interventions to ensure loans and subsidies to the MSMEs to ensure their sustainability. "The loans to the MSMEs, as per the SLBC report, increased to Rs 69,162 crore in September 2022, from Rs 62,141 crore till March 2021. This rise is due to the higher amount of loans sanctioned to the MSMEs," Rajeev said while addressing a press meeting.
The government has also announced a subsidy of 4% on the interest rate of the loan obtained by the entrepreneurs, making the industry more attractive to start-ups and investors.
"One of the distinctive aspects of this program is its geographical spread. It covers all districts of Kerala, and more or less, the enterprises are equally distributed," Namasivayam said.
The LDF government has announced plans to retain the growth in the industrial and manufacturing sector through effective political intervention and by retaining the planning board and annual plans with the participation of the people.
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