Kerala : Trade and Commerce | Kerala State PSC (KPSC) Preparation - Kerala PSC KAS PDF Download

Introduction to Economic Reforms in India

• The primary aim of economic reforms in India was to enhance productivity growth and competitiveness within the manufacturing sector.
• These reforms targeted the modernization and efficiency of Indian manufacturing, anticipating that these changes would lead to increased and sustainable growth.
• The government initiated deregulation through a liberalization program, focusing on investment patterns, trade policies, the financial sector, taxation, and public enterprises.

Significance of Industrialization in Developing Countries

• Industrialization has become a central theme in the mid-twentieth century, particularly for underdeveloped and developing countries like India.
• Many less developed countries view industrialization as a potential solution to various issues such as poverty, insecurity, overpopulation, and underdevelopment.
• For nations like India, economic development primarily hinges on industrial growth, as stated by leaders like Pt. Jawaharlal Nehru.
• Industrialization is seen as the key to restructuring the economy and achieving sustained growth, especially considering that India's economy is predominantly agriculture-based.

Importance of Industrialization for Economic Progress

• Pt. Jawaharlal Nehru emphasized the critical role of industrialization in driving real progress, with his vision aiming to position India among the developed nations through industrial growth.
• Industrialization is deemed essential for sustainable economic growth, as demonstrated by the experiences of advanced countries that have shifted from agriculture-centric economies.
• Industrialization plays a crucial role in driving sustainable economic progress. Let's delve into the significance of industrialization and its impact on economic development.

Factors Influencing Terms of Trade

• Low Income Elasticity of Export Goods: Agricultural economies tend to face unfavorable terms of trade in the long run due to the low income elasticity of their export products. Developed nations often have surplus agricultural goods for export, while the demand for these products internationally remains limited.
• High Income Elasticity of Import Goods: In contrast, there is a high demand for manufactured goods from Less Developed Countries (LDCs) due to the intense need for these products. Additionally, technological advancements lead to a decline in input-output coefficients, replacing primary raw materials with more cost-effective industrial alternatives.

The Role of Industrialization in Economic Growth

• While focusing solely on the tertiary sector can lead to inflation and hinder economic growth, industrialization paves the way for sustained development. History shows that overcoming a nation's technological and economic backwardness necessitates industrial sector growth and diversification.
• Industrialization involves the rapid establishment of industries and consistently accompanies economic advancement. It's important to note that economic development shouldn't be equated with industrialization, as the latter is just one component of the overall development process.
• For instance, countries like South Korea and Japan exemplify the transformative power of industrialization. Through strategic investments in manufacturing and technological innovation, these nations elevated their economies and improved living standards for their citizens.

Overview of Trade in Kerala

• Kerala boasts a rich history of trade with global partners, historically centered around horticulture and marine exports.
• However, recent shifts have highlighted risks in over-reliance on these sectors due to volatile global commodity prices beyond the state's control.
• Diversification is essential, emphasizing the inclusion of high-value knowledge-based goods and services to mitigate risks and enhance economic inflows.
• Efforts are needed to enhance the skills and employability of Keralites to capitalize on global opportunities beyond the traditional semi-skilled roles.

Boosting Export Diversity

• Encouraging the export of high-value goods and services alongside traditional products like pepper, cashew, coir, tea, cardamom, and marine items.
• Notable export growth in recent years: cashew kernels (11%), sea foods (22%), spices (41%), and coffee (36%).
• However, minor declines were observed in tea (0.21%) and coir products (6.5%) exports.

Trade Operations and Cochin Port

• Cochin Port serves as the primary gateway for trade in Kerala, managing a significant portion of the state's trade operations.
• Key trade items passing through Cochin Port include pepper, cashew, coir products, tea, cardamom, ginger, spices, spices oil, and marine products.

Enhancing Kerala's Tourism Potential

• Capitalizing on Kerala's status as a sought-after tourist destination by ensuring eco-friendliness, safety, and world-class recreation facilities.
• Efforts should focus on preserving Kerala's rich historical and cultural heritage to attract tourists and boost the local economy.

Major items of Imports

• Imports through Cochin Port have been on the rise, with a variety of goods being brought in.
• Main imported items consist of:
  • fertilizers and raw materials
  • food grains
  • iron and steel
  • machinery
  • newsprint
  • raw cashew nuts

Industries in Kerala

• Kerala is actively striving for rapid industrial growth within its constraints.
• Traditional industries in Kerala include:
  • handloom
  • cashew
  • coir
  • handicrafts, employing individuals from marginalized communities.
• Other significant industries are:
  • Rubber
  • Tea
  • Ceramics
  • Electric and Electronic Appliances
  • Telephone Cables
  • Transformers
  • Bricks and Tiles
  • Drugs and Chemicals
  • General Engineering
  • Plywood Splints and Veneers
  • Beedi and Cigar
  • Soaps & Oils
  • Fertilizers
  • Khadi and Village Industry Products
• Modern industries in Kerala comprise:
  • Metal
  • Shipping
  • Software
  • Electronics
  • Automobiles
  • Real Estate
  • Tourism
• Kerala hosts various manufacturing units producing:
  • precision instruments
  • machine tools
  • petroleum products
  • paints
  • pulp paper
  • newsprint
  • glass
  • non-ferrous metals
• Key export products from Kerala include:
  • Cashew Nuts
  • Tea
  • Coffee
  • Spices
  • Lemongrass Oil
  • Seafood
  • Rosewood
  • Coir
• Kerala's land is rich in deposits of:
  • good quality china clay
  • valuable minerals in beach sands
• The state is known for its:
  • heavy mineral sands
  • china clay reserves, which contribute significantly to mineral production.
• Kerala also has notable deposits of:
  • gold in both primary and placer forms, primarily found in Wayanad and Nilambur regions.

Traditional Industries in Kerala

• Traditional industries are vital for Kerala's industrial growth, offering significant employment opportunities with minimal capital investment.
• Sectors like coir, handlooms, khadi, bamboo-based, handicrafts, and village industries face challenges such as low productivity, inadequate income for workers, high production costs, and quality issues.
• Issues like limited product range, outdated technology, and lack of professional marketing hinder growth and sustainability in these sectors.
• The threat of job losses due to mechanization, large-scale production, and global competition looms over these traditional industries, potentially leading to poverty and social issues.

Development of Tourism Industry in Kerala

• Until the early 1980s, Kerala was relatively unknown as a tourist destination, with most tourism activities concentrated in northern India. Recognizing the potential of tourism, Kerala laid the foundation for its growth in the mid-1980s. In 1986, Kerala became the first state to officially declare tourism as an industry, marking a significant milestone. The state's first tourism policy, introduced in 1995, emphasized Public-Private Partnerships and aimed to maximize Kerala’s tourism potential while fostering social and economic growth.
• By the early 2000s, tourism in Kerala had evolved into a major, multi-billion dollar industry. Recent five-year plans have focused on Responsible Tourism, aimed at enhancing the quality of life for local communities. Kerala has successfully captured new markets through innovative products and marketing strategies, including the adoption of the tagline "God’s Own Country" in its promotional campaigns. In contrast, the Indian government recognized tourism as an industry only in 1992.