Introduction

Industrialization in Kerala is far from being commensurate with the socio-economic achievements for which the state is so justify famous Industrialization in Kerala has failed to generate employment In 2001, of the total 10 million workforce, 75% were engaged in non-agricultural activities and only 0.3 % in factory sector ( national 46 % and 2 %) Keralas Industrial backwardness is due to : High incidence of labor unrest Trade union movement in the state Weak industrial structure

Keralas Labor Market

Workforce is engaged in industries that employ traditional technology cashew processing and Beedi making According to ASI chemical and rubber based industries dominate value added in factory sector - cashew processing and Beedi making dominate employment in factory sector After 1980s, Construction and Service sector gained momentum 1960 1970s Per capita income grew at annual rate of 1.9% After 1973, jobs opened up in West Asia for construction, as a result workers from Kerala migrated to gulf countries 1980-1990s Slower influx of industrial investments 1990-2000 - Per capita income grew at 4.6% ( nation 3.6%) However, by 1998, no. of Kerala workers working outside India increased than those working in organized sector in Kerala

Kerala s Industrial Backwardness

Brought in informal-sector workers into its fold Wages of workers increased than national average Strength Lost its advantage in industries that are based on cheap and unskilled labor Weakness Weak industrial structure Low level of diversification, low scales of production operation Potential economies of scale existed in India; however Kerala failed to recognize it Keralas share in total value added in Indias chemical industry was 4 % in 1980s; further declined to 2.3% in 1998 ( Maharashtra and Gujarat share of 60 %) Kerala had no specific advantages with regard to availability of raw material, market ( Textile, soap industries based in Mumbai) Weakness

 In 1940s, industrial development in Travancore meant the development of large-scale industries Requirements of small-scale industries and agriculture overlooked Opportunity 5 companies established IAC, FACT, TECIL , TTP, TCC Pallivasal Hydro-electric project set up in 1930 9400 KW Power surplus from 1966, when the Sabarigiri project was commissioned, until 1982; when the state went through 1st power cut Delayed industrialization due to mineral deposits in Eastern India, No oil deposits, No potential market - Weakness Strength available of hydroelectricity, deposits of rubber, bamboo, forests, herbs, clay Major players in industrialization Govt. of India, State govt. and the private sector Direct investment in industry by Central govt. has always been less than proportionate than Keralas population since 1950 - Threat Financial transfers from Central govt. to the state decreased from 14.6% in 1980s to 11 % in 1990s Threat

 Since 1956, successive governments in state attempted to bring power-intensive industries to the state by offering major concessions on electricity tariff Average price of electricity in Kerala has always been lower than countrywide average - Strength Share of direct investment in industry by Central govt. increased mostly in chemical industry Expansion of many chemical-producing industrial units depended on simultaneous emergence of chemical-consuming industries in Kerala State and Central govt. greatly encouraged private sector investment Also, Kerala had to face stiff competition from bigger chemicalproducing industrial units of Maharashtra, Gujarat and Tamilnadu Threat

 The installed power generating potential in Kerala increased from 1012 Mw in 1980s to just 1771 Mw in 1990s (only 75% increase as compared to national increase of 195%) Kerala is a narrow stretch of land, its rivers are monsoon-fed; only storage hydroelectric schemes are feasible for the state Proposals for storage schemes had raised serious protests by environmental groups Also, there were popular protests against air and water pollution caused by chemical-producing units Difficulties in marketing chemical products (titanium dioxide, acetone, phenol, calcium carbide) in home state Weakness Low productivity in Kerala due to restrictive labor practices, work to rule under the protection of trade unions Trade union dominance protest against technological changes Number of labor disputes and lost of man days increased after independence till 1960 Negative response to new investments industrial units moved from Kerala to Tamilnadu psychic cost incurred by entrepreneurs

Measures for Industrial growth

Establishment of SMEs, manufacturing, agro processing industries under PPP Research institutions to explore opportunities Effective state intervention in knowledge-based industries Revamp traditional industries Measures to channel domestic savings to productive investment Export opportunities for cashew, tea, spices, seafood Tourism development Restructure labor policy and visible improvements should reach to entrepreneurs