Economy of Kerala

Since its incorporation as a state, Kerala's economy largely operated under welfare based democratic socialist principles. In recent years, the state has liberalised its increasingly mixed economy, allowing greater participation by the free market and foreign direct investment. Kerala's nominal gross domestic product (as of 2004–2005) is an estimated 89451.99 crore INR, while recent GDP growth (9.2% in 2004–2005 and 7.4% in 2003–2004) has been robust compared to historical averages (2.3% annually in the 1980s and between 5.1% and 5.99% in the 1990s). The state has clocked a 8.93% growth in enterprises from 1998 to 2005 compared with the national average of 4.80%. Nevertheless, relatively few major corporations and manufacturing plants choose to operate in Kerala. This is mitigated by sent home by overseas Keralites, which contributes around 20% of state GDP. Kerala's per capita 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.

Since its incorporation as a state, Kerala's economy largely operated under welfare based democratic socialist principles. In recent years, the state has liberalised its increasingly mixed economy, allowing greater participation by the free market and foreign direct investment. Kerala's nominal gross domestic product (as of 2004–2005) is an estimated 89451.99 crore INR, while recent GDP growth (9.2% in 2004–2005 and 7.4% in 2003–2004) has been robust compared to historical averages (2.3% annually in the 1980s and between 5.1% and 5.99% in the 1990s). The state has clocked a 8.93% growth in enterprises from 1998 to 2005 compared with the national average of 4.80%. 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 Deve 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.