KOCHI: Call it a double whammy. Kerala recorded an economic growth rate of 6.19% in real terms in the 2024-25 fiscal, as per the revised estimates of the Union Ministry of Statistics and Programme Implementation (MOSPI) for various states.
The state’s latest Gross State Domestic Product (GSDP) growth not only declined from 6.73% recorded a year ago — in FY24, but it was also the lowest in South India. Significantly, Kerala’s GSDP for 2023-24 is an upward revision from 6.52% reported by the state economics and statistics department. India’s GDP growth rate was 6.3% in 2024-25.
Among southern states, Tamil Nadu posted a robust 11.19% growth in 2024-25 and is the fastest growing state economy in the country. Andhra Pradesh (8.21%), Telangana (8.08%), Karnataka (7.37%) and Odisha (6.84%), were also ahead of Kerala
As per MOSPI, Kerala GSDP for 2024-25 at current prices (nominal GSDP) grew by 9.97%, lower than the projected growth of 11.7% over 2023-24 in the budget early this year. The state’s nominal GSDP stood at Rs 12,48,533 crore against the budget projection of Rs 13,11,437 crore.
Nominal GSDP refers to the total value of goods and services produced within a state, measured in the prices of the current year. This means the values are not adjusted for inflation and reflect the actual market prices prevalent during 2024-25.
K Ravi Raman, expert member, Kerala State Planning Board, said the state’s long-term growth trajectory shows improvement – its GSDP was only growing at 4.26% in 2014-15. This reflects economic resilience at national and state levels, he said. “India recorded its highest-ever GST collection in 2024-25, with revenues nearly doubling compared to 2020-21,” he said.
‘Timely, targeted initiatives essential’
K J Joseph, director of Gulati Institute of Finance and Taxation (GIFT), Thiruvananthapuram, said the marginal decline in 2024-25 reflected a combination of domestic fiscal constraints and external economic pressures.
“The tightening of borrowing limits imposed by the Union government significantly reduced Kerala’s fiscal flexibility, resulting in a cutback in capital expenditure, which is crucial for stimulating growth. At the same time, productive sectors especially agriculture, and construction saw slower expansion in the previous fiscal compared to the national average,” he said.
Additionally, global economic uncertainties and disruptions in migration and labour markets in Gulf countries affected remittance flows and external demand.
“Given Kerala’s structural dependence on overseas incomes, such external shocks have a direct bearing on household consumption and economic activity, contributing to the moderated growth trajectory,” said Joseph.
Going forward, the stalemate in India-US tariff negotiations poses a serious challenge not just for the country but for Kerala economy too, reckoned Ravi Raman.
“The situation may disrupt production dynamics, reduce employment and ultimately lower GST collections, which are vital for both Union and state revenues. Kerala, which benefits significantly from exports such as marine products and IT services, stands particularly vulnerable.
Unless we redraw international division of labour and reorient our trade strategies, we will have to face the consequences of stagnating exports, falling revenues and economic stress at the state level. Timely and targeted initiatives are essential to shield Kerala’s economy from these external shocks and to maintain sustainable growth,” said the Planning Board member.