A Webinar on ‘Trade in Kerala Economy’ was presented by Professor Sushil Khanna, IIM Kolkata & Gulati Institute of Finance and Taxation over CISCO Webex Meetings on Friday the 21st of August, 2020 at 3.30 pm. Dr Rammanohar Reddy, Editor, The India Forum was the moderator of the webinar.
Abstract: Internal trade of commodities in India became more difficult to track as freight movement in india gradually shifted from rail to road transportation. The introduction of Goods and Services Tax (GST) and stipulation that all internal or external commodity movement be covered by eWay bills now provides an opportunity to track movement and transactions. GST data hence provides an opportunity to track movement of commodities and trade between economic agents, within a state and across states.
An analysis Kerala’s trade shows for recent period shows that though 52 per cent of all transactions are within Kerala, they account for about 45 per cent of all traded goods in value. As far as trade with other states is concerned, Kerala imports commodities worth Rs. 1.5 trillion rupees and exports commodities worth only Rs. 500 billion, running an internal trade deficit of Rs. 1 trillion (Rupees one lakh crores). This huge deficit is financed by large remittances to consumers by migrants to middle east and other countries and implies that the externalities from a booming consumer market in Kerala are reaped by neighbouring states. Tamil Nadu and Karnataka are the largest exporters to Kerala
Kerala also seems to import high value commodities like motor vehicles, white goods, electronics, ceramics and construction material et, while export traditional commodities like rubber and plastic products, spices, and agri based commodities etc. Similar commodities along with marine products form the bulk of Kerala’s international exports.
This unbalanced internal commodity trade financed by income transfer from consumers in Kerala to producers in neighbouring states also presents the state with an opportunity to foster industrial production through a carefully targeted industrial policy. The fact that Kerala has an educated and trained workforce will be a great asset in such an industrial drive.