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Vol 2 Issue 3,4 April -May 2012


Vol 2, Issue 3 & 4 April-May 2012

RNI No. KERENG02297

Editor K J Jacob Principal Correspondents Aby Abraham G K A P Jayadevan Design and Layout Renu Arun Website Suhas K Sales and Marketing Jose Thomas Printed, published and owned by K J Jacob and published from Independent Media, XI/173 B, Mulakkampallil Buildings, Kunnumpuram-Civil Station Road,Thrikkakkara, Kochi,Kerala-682 021 Phone: 0484-2421916 and Printed at Sterling Print House Pvt.Ltd. Door No: 49/1849, Ponekkara-Cheranelloor Road, Aims Ponekkara P.O., Kochi - 682 041 Phone : +91 484 2802522, 2800406 *Editor: K J Jacob For subscription, advertisement : sales@economic-update.in Tel: +91 99475 39023

We value your feedback. Please write to us at: letters@economic-update.in Read us at www.economic-update.in Cover design : Anoop Radhakrishnan

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Wanted: A new bottle

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t has not been very long since vendors selling tender coconuts occupied the roadsides of Kerala. Today, tender coconut water has moved from the roadsides to the supermarket shelves across the world, dislodging many an established product. It is today one of the fastest growing beverage segments in the world. It is not just tender coconut water that is attracting the attention of the world. Coconut is today the subject of much research for its therapeutic properties. Chefs all over the world vouch for its culinary effects. Traditional coconut products, too, are gaining acceptance. The experience of makers of coconut-based products show that there is a ready market for the products in the State and other parts of the world. All these are expected to boost the demand for coconut throughout the world. The Coconut Development Board has taken a slew of steps to rejuvenate coconut cultivation in the country. From increasing production and productivity in farms to harvesting, processing and marketing, it has answers to most of the problems plaguing the sector. KSIDC also is setting up an Integrated Coconut Park at Kuttiyadi in Kozhikode district to develop coconut-based industries. The cover story of this edition focuses on the opportunity that is unravelling in the space. Kerala that has built an industry – coir – using just the husk of the coconut, has inherent advantages in the sector. A huge market exists for coconut products in the world today. The State should be willing to share the goodness of the coconut and profit from it. At the same time it should be open to the new opportunities that come up in the sector. That flavoured drinks based on tender coconut water have made a quiet entry in the supermarkets of the State that traditionally harvests coconuts only in their ripe form should serve as a pointer to us. A change in mindset on the part of both farmers and entrepreneurs in the State is needed to take advantage of the opportunity.


Contents COVER STORY

26 The tree of life It is indeed a hard nut to crack. The hard exterior, though, hides a sweet and soft core – a bounty of nature, with unmatched qualities. Kerala slept under its shade for ages. Today the world is waking up to it. And entrepreneurs are busy building businesses on it 4


Contents

17 The

beauty and the beast

It’s not just backwaters and houseboats that Kerala offers. Adventure tourism makes it presence in its wilderness

15 Wooing the world Government lays out development agenda before diplomats 20 Branding Kerala CII initiative to make ‘Made in Kerala’ a brand

22 Breathe Easy You cannot do without breathing. Do it the healthy way

34 To swim or sink Organisations must ensure that their knowledge base is dynamic

The Other Side 38

Less is more

Farmers should be market savvy. There is no point in producing for a society which does not care

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Inkel, the government-backed infrastructure company in Kerala, is building a 2-lakh sft structure offering standard design modules (SDMs) at Angamaly in Ernakulam dist. Being built on a 5.5-acre plot, the five storey building will have data connectivity, dedicated power and water supply, parking space, and advanced fire protection systems. 6


According to Inkel, the modules will be ideally suited for IT/ITES, electronics, avionics, banking, financial and a host of other service sector industries. The facility, located close to NH-47, will be ready for occupation soon. (Inset: The building being completed) 7


The cover story on e-commerce showcased a new trend that is catching up in Kerala. It is good to know that Kerala, though could not cash in on the boom in the software sector, is making the most of the next wave. With the population burgeoning, there will be new paths to reach out to the customer, and ecommerce is sure to be one of them. Governments must support the e-commerce sector as start-ups dominate it. They create a number of jobs; they not only offer best services, but best prices as well. The article, however, was wrong in that not all companies follow selland-stock form; there are the likes of Flipkart who stock the product and also manage excellent supply chain. Prajeesh Vijayan Delhi I recall the song on Sesame Street that went ‘There’s a hole in the bucket, dear Liza, dear Liza..’ Henry Monster had a hole in his bucket. To fix it, he needed a stick. The stick was too big, so he needed to cut it. To cut it he needed a hatchet, and to sharpen the hatchet he needed a stone. But the stone was dry and to wet it he needed water; to fetch water he needed a bucket! It was surprising to see that the very same dilemma has inspired a business strategy (The Strategic Marketing Tool, Mr S R Nair). Certainly it is better to make sure that there are no leaky buckets instead of trying to fix them later. This was made clear to me when I talked to a sales executive at one of the big car dealerships here recently and he told me how nearly all of his sales were now based on referrals rather than field 8

work. Investing on customer service also means savings on marketing. Azhar Moideen Thrissur Chief Minister Oommen Chandy’s presentation at the recent Pravasi meet and the core sectors identified by the government for the upcoming Emerging Kerala meet show the direction in which the State is going to develop. I have also noticed that several sectors that Mr Sam Pitroda has pointed out as having high growth potential have also figured among them. It is very important that the government is able to project a clear vision before the investing community if it were to attract it. One also hopes that the Emerging Kerala meet will be useful for the promoters of delayed/troubled projects like the Smart City. Sajith Bhaskar Kochi The story ‘Export Fresh’ was indeed a refreshing one. I am very happy to see CIAL taking such innovative and game changing measures. The story of CIAL itself is an inspiring one; and it is noteworthy that it is taking more pionerring steps to envigorate the State’s economy, especially its farm sector. Mathew Abraham Kochi It’s always a pleasure to read ‘The

Other Side’ but this time it gave me reasons to panic as the columnist debunked the idea of reducing carbon emissions by the West. True, we in the developing world are responsible for the large chunks of carbon emission but the developed world has already played its part. This will become clear if we take the per capita consumption of energy and the carbon footprint they leave behind. And please keep in mind that China is no more a developing country; it is one of the super powers and must act responsibly. India, too, needs to do some rethinking on its industrial policies. As per the article, the BRIC countries have a huge role in this scenario and they should act wisely. N Rajalakshmi Thrissur I must thank you for the Big Picture series. We hear of several projects coming up in the state but seldom get a clear idea of them. We know that the big projects coming up in Kochi could change the face of industrial Kerala, but local editions of the newspapers do not bother to carry their pictures, except at the time of their inauguration. K Mohammed Shafi Kozhikode


I say!

I feel an emotional attachment with these projects since I have been involved with them since their inception. And having sold the idea of a high speed rail corridor, I feel a moral responsibility to see it through Mr E Sreedharan, former managing director, Delhi Metro Rail Corporation, talking on his interest in the rail projects in the State “The change taking place in the State has not been understood by many. Technopark's stupendous success has not brought about a change in people's perception. Startup projects need a conducive ecosystem to flourish. Besides enhancing budding entrepreneurs' confidence and potential for success, it also helps fashion ideas” Infosys Co-founder Kris Gopalakrishnan while inaugurating the Startup Village campus at Kinfra Park, Kalamassery “As the finance minister when I think of enormity of the subsidies to be provided, I lose my sleep. There is no doubt” Union Finance Minister Pranab Mukherjee in his address to a conference on Public Distribution System and Storage

“While we are all optimists, I am also a realist. We must think optimistically, invest realistically and promise conservatively. With that in mind, I feel the economy will grow by 6.5-7 per cent this year” L&T chairman and managing director AM Naik speaking on the impact of the domestic economic slowdown “We are not bridging the gap. We want to get there and say, we want to develop the technology which will allow you more for less and that's where Mahindra Research Valley comes in” Mahindra & Mahindra vice-chairman and managing director Anand Mahindra when asked whether the Mahindra Research Valley was an effort to bridge the gap in technology with developed nations

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AT A GLANCE

Socialist Hollande is French President

Socialist Party candidate François Hollande has been elected French President, after he pledged to shift the burden of economic hardship onto the rich and to resolve the protracted euro sovereigndebt crisis by softening the current prescription of austerity. With his victory over conservative incumbent Nicolas Sarkozy in the second and final round of voting, Mr. Hollande—France’s first Socialist president in 17 years—won a mandate to challenge German Chancellor Angela Merkel, who has imposed spending cuts as the main remedy to repair the public finances of heavily indebted European countries. Later, in a joint news conference with Ms Merkel in Berlin, he said, “I said that my wish is that growth is not an empty phrase, that it is something which, in reality, is happening.” Germany saves Eurozone the blush A growth of 0.5 per cent in the first quarter of 2012 in Germany has prevented the economy of the 17 countries that use the euro from falling into a reces-

sion. Germany accounts for over a quarter of economic output in the single currency bloc. This growth was because Germany's exporters were able to offset tough conditions across Europe by gaining business elsewhere. Solid domestic consumption levels also helped shore up the country’s economy, the world’s fourth largest. Luxury carmarkers such as Mercedes-Benz, Audi and BMW showed strong profits on increased sales in Asia, especially China, and in the U.S., where the economy is making a modest recovery. Without it, the economy of the remainder of the Euro-

zone would have slipped into a recession, officially defined as two consecutive quarters of negative growth, with a 0.25 per cent decline in GDP. IPO values Facebook at $100 billion Ther IPO by social networking site Facebook could be the third largest in US history, raising as much as $16 billion and valuing the company at around $100 billion. Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, has said it will add about 84 million shares to its IPO, floating

about 421 million shares. This is about 25 per cent more than what it was estimated earlier. The expanded size, coupled with Facebook’s recently announced plans to raise the IPO price range, would make Facebook the thirdlargest initial share sale in U.S. history after Visa Inc and General Motors. The IPO, Silicon Valley’s largest, scheduled for May 18, eclipses the roughly $2 billion debut by Google Inc in 2004. The company is drumming up massive demand for the offering even as slowing revenue and user growth spur questions about the longterm Facebook story. Google gets license for self-driven cars Google’s self-driven cars will soon be appearing on Nevada roads after the State’s Department of Motor Vehicles approved the nation’s first autonomous vehicle license. The move came after officials rode along on drives on highways, in Carson City neighborhoods and along the famous Las Vegas Strip. The Nevada legislature last year authorized self-driven cars for the State’s roads, the first such law in the United States. Google’s self-driven cars rely on video cameras,

radar sensors, lasers, and a database of information collected from manually driven cars to help navigate. The DMV licensed a Toyota Prius that Google modified with its experimental driver-less technology, developed by Stanford professor and Google vice-president Sebastian Thrun. Samsung edges out Nokia Samsung Electronics has

overtaken Nokia as the world’s biggest vendor of mobile phones for the first time, ending the Finnish company’s 14-year run as the global leader. Samsung shipped 93.5 million handsets in the first quarter, 36 per cent more than a year earlier, compared with 82.7 million for secondranked Nokia. Demand for Galaxy smartphones helped the Suwon, South Korea-based Samsung post first-quarter net income of $4.5 billion, beating analysts’ estimates. Nokia had been the biggest mobile-phone maker by shipments since 1998, when the Espoo, Finlandbased company took over the spot from Motorola. Nokia reported a $1.8-billion first-quarter operating loss after handset sales slumped. 11


AT A GLANCE

Audi pips Merc to claim second slot

As the race in luxury car segment hots up in India, Audy from the Volkswagen stable has replaced Mercedes Benz in the second position in the first quarter of 2012. BMW, which replaced Mercedes at the top slot in 2009, continues to occupy the position, selling 2,369 vehicles in the quarter. Mercedes sold 2,130 units against 2,269 units sold by Audi. Mercedes has been a player in Indian market for decades while BMW and Audi started their operations in India only in 2007. BMW and Audi could leverage on their entry-level corporate editions of models like BMW 3-series and Audi A4. BMW’s mini SUV X1 accounts for a big part of its sales while Audi is planning to launch Q3 mini SUV. Mercedes has no comparable product so far. New law to clean up procurement Hit by a string of corruption charges, the government is setting up a mechanism to bring in more transparency in the procurement process. The Union Cabinet recently approved a Bill that seeks to regulate government 12

purchases of above `50 lakh through a transparent bidding process. The Public Procurement Bill has a provision to debar bidders found to engage in corrupt practices. It provides for a jail term ranging from six months to five years for public servants found guilty of demanding and accepting bribes from bidders of government contracts. At present, there is no comprehensive legislation governing public procurement by the Central government and Central public sector enterprises. Air India to get `30,000 cr

The Union government has offered a financial restructuring plan for Air India, which includes equity infusion to the tune of `30,000 crore by 2020 and restructuring of debt. The airline will get `6,750 crore in 2012 alone. It will also hive off the engineering services and ground handling business, and go ahead with the induction of 27 new Boeing 787 Dreamliners. The MRO unit of the airline will get `375 crore over three years and is projected to be a profit-making company from 2017-18. About 7,000 employees of Air India will migrate to

the subsidiary company. The MRO unit will aim at tapping the potential of nearly $1.5 billion in the Asia Pacific region. Industrial growth slows to 4.1% in Feb Poor performance of the manufacturing and consumer goods segments has the industrial production growth in February slow down to 4.1 per cent, suggesting persistent sluggishness in the economy. Growth in factory output, as measured by the Index of Industrial Production (IIP), was higher at 6.7 per cent in February 2011. Besides, the IIP growth has been revised downwards to 1.14 per cent in January, from the provisional estimates of 6.8 per cent. Output of the manufacturing sector, which constitutes over 75 per cent of the index, rose by just 4 per cent in February 2012, compared to 7.5 per cent in February 2011. Consumer goods output has also shown a slowdown as the production declined by 0.2 per cent in February, as compared to 13.4 per cent in the same month last year. Telenor, Unitech set for arbitration

The Company Law Board has okayed the petition by Unitech, the JV partner with Norwegian telecom

major Telenor in Indian telecom operator Uninor, to seek international arbitration. Telenor is seeking to scrap the joint venture with Unitech and migrate its business to a new company to seek fresh operating licences, after Uninor’s telecoms permits were ordered to be revoked by the Supreme Court in February hearing the 2G spectrum allocation scam. Unitech has opposed Telenor’s move and has said the Norwegian company cannot unilaterally scrap the joint venture agreement and that it had veto right to block any asset transfer. Telenor owns 67.25 percent of the joint venture and Unitech holds the remainder. With 41 million customers at endFebruary, the JV ranks eighth in a market of 15 mobile carriers. Mr K Venkataramanan to be L&T MD &CEO The Board of directors of the engineering conglomerate Larsen & Toubro has selected Mr K Venkataramanan, to succeed Mr AM Naik as the CEO and Managing Director. The 67 year old MrVenkataramanan, is currently President, Hydrocarbons and whole-time director on the company’s board. He joined L&T as a graduate engineer trainee after completing his graduation in Chemical engineering from IIT Delhi. Mr Naik who turns 70 this year, has been the CEO and MD since 1999. He will continue as the Executive Chairman of the group.


AT A GLANCE

Infosys new campus in Technocity

The IT majors in the country seem to be on an expansion spree in Kerala. After Cognizant Technologies took over land in Infopark, Kochi, to build its new campus, Infosys has leased 50 acres of land at Technocity, Thiruvananthapuram. The campus – Infosys’ second in the State – will have a one million sq ft office complex, capable of accommodating 10,000 professionals and will entail an investment of `1,000 crore. The company now contributes 21 per cent of the total IT exports of `2,875 crore from the State. Kerala annual plan focuses on farming

The annual plan for the State for 2012-13 has been set at `14,010 crore. The plan amount is `2,000 crore higher than that of the previous year. The annual plan gives impetus to agriculture and allied areas, which have

got an outlay of `1,288.47 crore, up 70 per cent from that of the previous year. Social sector has an allocation of `4,650 crore, while local self governments will receive `3,228 crore. FACT invites private investment

Fertilizers and Chemicals Travancore (FACT) has invited expression of interest (EOI) from both private and public sector companies for investments in its expansion and diversification projects. It has proposed a 50:50 joint venture for the projects. With the LNG terminal going on stream this year end, FACT will be able to switch to LNG which is a cheaper feed stock for its requirements. FACT plans to build an ammonia-urea complex entailing an investment of `4,600 crore. A new 2,000-tonnes-a-day sulphuric acid plant at a cost of `318 crore and a 1,000 tonnes-a-day NP complex fertilizer plant costing `200 crore are also planned. CIAL traffic grows 10% Cochin International Airport has reported a 10 per cent increase in international passenger traffic and 8 per cent in domestic travel during 2011-12. The total number of

passengers who travelled through CIAL increased to 47.23 lakh in the year, up from the 43.45 lakh reported in 2010-2011. CIAL has achieved this growth at a time when the aviation sector in the country is going through tough times. The airport handled 53 international and 152 domestic chartered flights during the year. SCI begins direct European services The Shipping Corporation of India has started its direct European service touching ICTT Vallarpadam. The vessel – SCI Chennai – with a capacity of 4400 TEUs will have the following rotation of service: Colombo – Ko-

chi – JNPT – Mundra – Salalah - Gio Tauro - Felixstowe – Hamburg – Antwerp – Gio Tauro – Colombo. The service will allow direct loading for European markets from Kochi. It will help save a minimum of six days of transit time and considerable transit cost.

ment for developing small hydel projects. It has identified 57 small hydro-electric projects that have a combined capacity to generate nearly 170 MW of power. A draft new policy for small hydel projects that aims at a targeted capacity addition of 150 MW by 2015, has also been brought out. The Kakkadampoyil stage II on Chaliyar in Kozhikode district (21 MW) is the largest of the projects followed by Parakkadavu project on Pampa in Kottayam district (10 MW). Other projects have capacities ranging from 0.3 MW to 10 MW. The State hopes to find investors for the projects during the Emerging Kerala meet. Joy Alukkas launches Joy Jets The Joy Alukkas group has started air-charter and helicopter services. The air-charter services will be available to various destinations in India, while the helicopter services will be available within Kochi. Joy Jets will operate short-range direct services to various destinations from CIAL, on five-seater Phenom – 100 aircraft. The helicopter service will offer a one-hour tour of Kochi on a six-seater Bell helicopter.

Kerala to push small hydel projects The Kerala government is inviting private invest13


project tracker The State government should make available land adjacent to the terminal as its share of the equity. It should also agree to purchase power from the plant. He said the government had agreed to the suggestions in principle and had identified 50 acres of land for the project. The partners would enter into the second round of discussions soon.

LNG terminal to be ready this year The LNG terminal at Puthuvype, near Kochi is expected to be commissioned by November-December 2012, according to Petronet LNG Limited managing director A K Balyan. The terminal was to be commissioned in July as per the original plan. The delay was due to the decision to double the capacity of the

plant from 2.5 mmtpa to 5 mmtpa midway through the project, he said. Now the whole 5 mmtpa capacity will be ready by December. Petronet has already signed a long-term contract to bring 1.5 million tonne of gas from Gorgon in Australia. It is also in discussions with Gazprom in Russia and RasGas of Qatar to source additional gas. GAIL is laying the pipelines needed for evacuating the gas. The work on laying the pipelines is also expected to be completed by the year end. Mr Balyan said that the proposed 1200 MW power plant at a cost of `3000-4000 crore as a 50:50 JV with the State government at Puthuvype was very much feasible. 14

PIB nod for Kochi Metro Kochi inched a step closer to realising its dream of the Metro when the Public Investment Board (PIB) gave its clearance to the project. The project now has to clear the last hurdle - the final approval from the Union Cabinet. As per the current plan, the Central government will contribute `1,002.23 crore or 20.26 per cent of the total project cost. Meanwhile, Mr Tom Jose, managing director of Kochi Metro Rail Ltd, has started talks with JICA officials to finalise loan for the project. Mr Jose said that the Department of Economic Affairs would forward the details of the loan to JICA soon. The whole process is expected to take nine months. The State government had earlier allocated `150 crore for the project in the budget. The preparatory works in the city the construction of the Salim Rajan Flyover and rebuilding the North Overbridge - are going on as per the plan. Govt to build airstrip in Wayanad After Bekal, another tourist destination, Wayanad, is set to get an airstrip. The government has directed

Kerala Industrial Infrastructure Development Corporation (Kinfra) to conduct a techno-economic feasibility study on the project. The Airports Authority of India had earlier identified a suitable location at Panamaram area in the district as part of the technical feasibility study. The State government proposes to raise funds for the project by forming a society on the lines of the Kannur International Airport Promotion Society. It has already set up a nine-member governing council for the same with Mr K Babu, Minister for Ports and Excise, as chairman, and Mr V Thulasidas, managing director, Kannur International Airport Ltd, as vice-chairman. The airstrip at Wayanad will improve connectivity to the district and give a boost to the tourism sector. Inkel plans 11 projects, to invest `5,000 crore

Infrastructures Kerala Ltd (Inkel) plans to invest `5,000 crore in infrastructure projects in Kerala in the next four years, according to Mr T Balakrishnan, managing director, Inkel. Inkel’s logistic park at Angamaly is coming up on 25 acres of land and will be ready for occupation by June. The company has also been awarded the PURA projects at Thalikulam and Tirurangadi. These projects involve an investment of `235 crore. The EduHealth city at Malappuram, to be developed on 250 acres of land, is in the final stages of master planning. It will have all clusters of educational, technical, general, legal and medical institutions, healthcare and commercial activities. A modern 300-bed cancer institute at Malappuram, a tourism complex at Veli in Thiruvananthapuram and an Ayurveda manufacturing unit at Punalur are among the other projects being planned.


KSIDC NEWS

Wooing the world

Government lays out development agenda before diplomats

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he government of Kerala has stepped up its efforts to spread the message of ‘Emerging Kerala’, the global connect programme for investors, by holding a meet of ambassadors of various countries in New Delhi. Chief Minister Mr Oommen Chandy, addressing a meet of top diplomats, including ambassadors and high commissioners, heads of trade missions and chiefs of international agencies, in New Delhi on April 22, said the State was ready for investment. “We want to send out a message to the world that investment is welcome.” Stating that the ‘Emerging Kerala’, scheduled for September 12 -14 in Kochi, is designed as part of the State Government’s development agenda, he said the meet has the long-term economic growth and

progress of the State at the top of its agenda. The proactive industrial and commercial policy the government has formulated seeks to transform Kerala into a vibrant entrepreneurial society with faster and inclusive growth. “It also aims to promote Kerala as a prime destination for industrial investment by ensuring en-

The Chief Minister said the government is expecting huge overseas investments in various sectors including infrastructure, technology, education and healthcare

vironmental protection,” he told the meeting. Allaying the fears often heard about Kerala, the Chief Minister said the State government has worked out a fair and equitable labour policy and a single window clearance mechanism for investment decisions. “These policy initiatives are targeting to create an investor-friendly environment for the long-term economic growth of the State,” he said. The Chief Minister said the government had worked out a suitable rehabilitation and compensation mechanism for the land owners so that land acquisition, a touchy issue in the State, is a smooth event. The Chief Minister said the government is expecting huge overseas investments in various sectors including infrastructure, technology, education and healthcare. The gov-

Chief Minister Oommen Chandy addresses a meet of diplomats and officials of multi-lateral agencies in New Delhi

15


ernment is also giving priority to developing infrastructure, including roads, high-speed rail, urban infrastructure and industrial parks and corridors. Mr Chandy said most of the projects would be developed on the public-private partnership (PPP) mode, providing huge business opportunities to both overseas and domestic investors. Minister for Industries and IT Mr P K Kunhalikutty said Kerala had already demonstrated its strength in various areas, including IT and IT-enabled services, tourism and healthcare. The Minister stressed on the focus the government has laid on eco-friendly industries. “Ours is a green State and we are taking special efforts to encourage eco-friendly

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industries,” he said. Kerala is aiming to get a minimum 5 per cent of the total IT business of the country, he said, adding it is proposing to create a built-up space of over 60 million sq. ft. for new IT units in the State. The diplomats present at the

“Ours is a green State and we are taking special efforts to encourage eco-friendly industries,” Minister for Industries and IT Mr P K Kunhalikutty told the meet

meet included those from the United States, Britain, France, Canada, Germany, Russia, Belgium, and China. Officials of mulitilateral financial institutions such as the Asian Development Bank and the World Bank, and industry bodies such as the Japan External Trade Organisation, the Indo-Canadian Business Chamber, the US-India Business Council also attended the meet. Managing director of Kerala State Industrial Development Corporation Mr Alkesh Sharma outlined the plans for the projects in the pipeline. “We are looking at attracting industrial investment of $20 billion for a five year period,” he said. Chairman of CII Kerala State Council Mr V K Mathews also attended the event.


Pictures: Special arrangement with Kalypso Adventures

Adventure Tourism

Kayaking through the backwaters is not just an adventure. It gives tourists a chance to get a closer look at the village life in Kerala

The beauty and the beast It’s not just backwaters and houseboats that Kerala offers. Adventure tourism makes it presence in its wilderness 17


T

Aby Abraham G K

raditionally tourism in Kerala means beaches, backwaters and hill stations. But no longer. Today Kerala offers tourists experiences of different hues – adventure tourism being one of them. Tourists - including foreigners who have already been to the best adventure tourism sports in the world - trekking through the hills, or kayaking in the backwaters of the State or cycling through its village alleys, is not an uncommon sight today. What is on offer? Kerala’s varied terrain offers much to adventure tourists. Be it trekking, wildlife safaris, cycling or rafting, the State has it all. Trekking through the thickly forested hilly regions of the State is a wonderful experience that many cherish. It takes them through breathtaking sceneries, and also gives them a chance to see wildlife endemic to the region. The treks are mostly multi-day affairs, with overnight stays arranged in camps or home stays. It gives tourists an opportunity

to see the life and culture in the area from close quarters. The government through the Department of Forests is also actively promoting trekking expeditions in the wildlife sanctuaries in the State, though with strict conditions. Trained naturalists accompany the trekkers as guides, and turn the whole affair into a great learning experience. And over the course of the trek, they often develop a close bond with the tourists. “It is the experience that we sell. The feedback we get from our clients is more about the people than the property,” says Mr Vishal Koshy, general manager, Kalypso Adventures. The Kochi-based Kalypso is one of the early birds in the State to promote adventure tourism. Cycling holidays also have many takers among the tourists visiting the State. Tourists can choose from a range of rides through different terrains – be it on the coastal stretches, through the midlands or on the hills and rugged mountains. Tour organisers usually sent a pilot vehicle to warn cyclists against obstacles and to make sure that the experience is hassle-free. It also serves as a support

system in case there are technical issues. They also provide multi-gear alloy bikes of international standards and arrange for professional guides to accompany them. “We had a great cycling trip in Kerala,” said Soleyne and Greg Poillion from France. “We really liked the fact that we had the feeling to discover the ‘real’ South India through the cycling and not to be in overcrowded touristic resorts. It was very well organized – we had nothing to care about and could properly relax - but flexible at the same time.” It is not just the houseboats that are available today to tourists to savour the beauty of Kerala’s backwaters. Kayaking and canoeing through the backwaters offer a much closer view of life in this waterworld, which lies below the sea level. The unique way of life, the local cuisine and agricultural practices of the region provide an unforgettable experience to the travellers. They can watch activities such as fishing, duck rearing and mussel collection that go on in these areas. Kayaking facilities are also available on many of the rivers in the State.

The government and the forest department are actively encouraging trekking, though with strict conditions

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Tours targeted at special interest groups are also available in the State. Birding tours and wildlife safaris give a glimpse of one of the 34 biodiversity sites in the world. The tourists also have the option of customising the tours by combining different activities. Special packages are available for families too. There aren’t many takers for hard adventures in the State. Paragliding that had once started in Munnar has now stopped. But the trend is catching on. “We are seeing an increase in the number of takers for adventure tour packages over the years,” says Mr Koshy. When one talks about adventure, the first thought that comes to the mind is safety. How safe are these tours? “More safe than the roads in our cities,” pat came the reply from Mr Koshy. The guides are trained in handling safety issues and have been certified by known agencies such as the Red Cross and the Himalayan Mountaineering Institute. The adventure tours offered in the State are of the soft adventure type and so today safety is not much of an issue. But the State government has to come up and enforce standards for the same, if it wants to be a premier destination for adventure tourism.

Kerala’s varied topography is a feast to the trekker’s eyes

There are village lodges that help visitor’s get the real feel of the greenery that Kerala is known for

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Branding Kerala CII initiative to make ‘Made in Kerala’ a brand

KSIDC managing director Alkesh Kumar Sharma inaugurates the Made In Kerala 2012 meet

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t’s a paradox that Kerala, not famous for nurturing entrepreneurship, has pioneered some of the path-breaking ideas for industrial development. Whether it was inviting foreign capital by getting Japanese major Toshiba as JV partner in the sixties, setting up Keltron to promote the electronics industry in the seventies, or building Technopark, a dedicated infrastructure for information technology industry, in the eighties, they were the firsts of their kind. India Inc followed up on every one of these steps and reaped a rich harvest. Kerala, which is trying its best to recapture the lost momentum in industrial development, is now toy20

ing with another pioneering concept: Made In Kerala. Mooted by the Kerala region of the Confederation of Indian Industry, the idea seeks to develop and promote indigenous industries and services and create a new brand im-

The Made in Kerala initiative seeks to develop and promote indigenous industries and services and create a new brand image for them at national and international levels

age for them at national and international levels. ‘Made In Kerala’ also plans to showcase the unique attributes of the State which can help the industry thrive: that it is green, non-polluting, eco-friendly, sustainable and balanced. That it is home to organic products and services. That it has the best human resource pool in the country and has an informed class of working people. That it is participative (employees and community), compliant with the laws of the land, transparent, without child labour and without discrimination based on age, gender, caste or religion. According to Mr Jose Dominic, who, as chairman of the Confedera-


The campaign will focus on the uniqueness of Kerala: it is green, non-polluting, eco-friendly, sustainable and balanced; it has the best human resource pool in the country and has an informed class of working people tion of Indian Industry-Kerala conceived the idea, Made In Kerala is an attempt to sell the strengths of the State. “There are many who rue that the State failed to catch up with others in industrialising itself,” he said. “But I think Kerala is lucky that it did not go ahead on a self-destructive path. The State continues to be green and friendly because we were slow to bring in polluting industries. Now we have a better background to work on our future.” Most other States who got on to an agenda now find it hard to disembark and align themselves with the sustainability goals, he pointed out. “We haven’t started on it yet, and hence we can plan it well,” he said. The idea got a big boost when leaders from Kerala’s industry, commerce, medicine, IT, politics and enterprises came together and presented their viewpoints on the topic on March 10, 2012. Organised by CII-Kerala, the ‘Made in Kerala’ meet pondered over the path the State should take to make the idea work. It suggested ways to forge a new identity for brands born and brought up in Kerala. It also focused on the unique competitive advantage that attracts investment in select, high-value sectors generating employment in both the manufacturing and services sectors. Mr Alkesh Kumar Sharma, managing director of KSIDC, suggested that the State explore ways to convert the value systems which it has assiduously nurtured over centuries

to take Kerala forward. Inaugurating the meet, he said, “The new image could be a compendium of quality, excellence, purity and harmony, considered as hallmarks of life in the region.” Kerala should also be able to make the most of its unique topography and resources including the mineral wealth, he said. The speakers averred that the State possessed strengths to compete with other States but had not paid enough attention to the positive aspects which placed the State on a unique pedestal. Mr George Paul, director, Synthite Industries Limited, said the State must design practical ways of advancing industrial development while holding on to its welfare State policies. Mr Rajiv Vasudevan, the founder and chief executive officer of AyurVaid hospital network, said the initiative could be a springboard for next phase of industrialisation. Mr V K Mathews, chairman of IBS Software, suggested that better infrastructure and skill development get due focus in the journey towards achieving the goal. Former finance minister Dr T M Thomas Isaac, members of the State Planning Board Mr G Vijayaraghavan and Mr C P John, Centre For Development Studies director Dr Pulapre Balakrishnan, Geojit BNP Paribas managing director Mr C

J George, Coconut Development Board chairman Mr T K Jose, Navara Rice Farmers Society president Mr Narayanan Unny, and Terumo Penpol Ltd managing director Mr C Balagopal also spoke. Mr Jose Dominic said CII is seeking to get the support of the government to institutionalise the concept. Ernst and Young are the knowledge partners for the project. “We are working on documenting the points which will form the basis for action,” he said. “Once we did the ground work, we will present our plan to the government. We are planning to hold the second meet in 2013 and by then, we would have an action plan ready.” Mr Dominic said CII envisages a system in which ‘Made In Kerala’ becomes a brand with a registered trade mark, which eligible companies from Kerala can use for a fee. “We are looking at forming a non-profit organisation in which the industry, the government and the civil society will be represented, to run it,” he said. It is not just industries but initiatives such as Kudumbashree are also part of ‘Made in Kerala’ because they truly represent the spirit of the idea, Mr Dominic said. “The concept needs a lot of promotion to become successful and we need to get government support for the initiative.”

Mr Jose Dominic who mooted the idea said CII envisages a system in which ‘Made In Kerala’ becomes a brand with a registered trade mark, which eligible companies from Kerala can use for a fee. “We are looking at forming a non-profit organisation in which the industry, the government and the civil society will be represented, to run it,” he said

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Health

Breathe Easy

You cannot do without breathing. Do it the healthy way

P

Jayadevan AP

roper breathing is critical to good health; it helps optimise body functioning, especially that of the brain. Improper breathing creates an imbalance in the oxygen/ carbon dioxide ratio, which results in hyperventilation and dizziness. If the brain does not get adequate supply of oxygen, it will result in the degradation of all vital organs in the body. Brain requires more oxygen than any other organ in the body. A proper supply of oxygen allows the body to metabolize food efficiently and to rid itself of all the noxious by-products of metabolism, especially carbon dioxide. Insufficient oxygen supply could result in mental sluggishness, negative thoughts and depression.

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Normally, people use only a fraction of their lung capacity. Stress, poor posture, long hours of office work which afford little movement for the body and habits such as smoking affect proper breathing. Stress and the resultant negative emotional states also affect the rate of breathing. Together, they often make breathing too shallow and too

Sages hold that the more life-force you have in your body, the more “alive” you are. It is present in all forms of nourishment but it is accessible and most constant in the air

quick. The result is oxygen starvation and a toxic build-up. The ancient yogis realised the vital importance of proper breathing. They almost equated breath with life. Says Hatha Yoga Pradeepika: “As long as there is breath in the body, there is life. When breath departs, life also departs. Therefore regulate the breath.” The yogic art of breathing is called as ‘Pranayama’ (controlled intake and outflow of breath). Prana is usually translated as breath, though this is only one of its many manifestations in the human body. “He who knows prana knows Vedas,” say Upanishads. They hold that prana is the sum total of all energies manifest in the universe. It is not just the air but the subtle life-giving element extracted from the air. The more life-


force you have in your body, the more “alive” you are; the less life-force, the less “life”. Life-force is present in all forms of nourishment but it is accessible and most constant in the air. The practice of pranayama regulates the flow of prana throughout the body. It also regulates the thoughts of the practitioner and bestows him with a calm mind. An average person takes around 500 cubic centimeters of air during normal inhalation. But in deep breathing, the intake of air is up to 3000 cubic centimeters, about six times the normal! With the practice of pranayama, the respiratory system functions at its best and as a result, the circulatory system also functions more effectively. And the resultant better de-toxification opens the doorway to good health. Practice of pranayama trains one for fully utilising all lobes of the lungs and to normalise the breathing rate. It also helps make the breathing uniform, continuous and rhythmic. Following are some basic practices for those who wish to learn pranayama. Abdominal Breathing Sit comfortably in a cross-legged position on the floor or lie flat on the back. One hand may be placed on the abdomen to feel its rise and fall. Relax the mind and body. Inhale slowly and deeply through the nose, feeling the abdomen expand and rise while keeping the chest still. As you exhale, feel the abdomen sink down. When you inhale, expand the abdomen and contract it when you exhale. Practice this exercise for ten cycles (one inhalation and one exhalation equals one cycle). Benefit: Breathing slowly and deeply brings air to the lowest part of your lungs and exercises your diaphragm which can greatly enhance breathing capacity. It relaxes mind and body, massages internal organs, calms emotions and induces good sleep. Rib cage breathing Sit comfortably in a cross-legged

position on the floor or lie flat on your back. Hands may be relaxed by the sides or placed on the sides of the ribs to feel them expanding and contracting. Gently contract the abdomen. Inhale slowly through the nose into the rib cage. Do not pull the breath deep into the lungs, but keep it focused between your ribs. Feel the ribs expand outward and the chest open as you breathe in. As you exhale, feel the ribs contract inward. Repeat five times. Benefit: Relaxes the mind and body and strengthens the lungs. Complete breathing Sit comfortably in a cross-legged po-

Practice of pranayama trains one for fully utilising all lobes of the lungs and to normalise the breathing rate. It also helps make the breathing uniform, continuous and rhythmic

sition on the floor or lie flat on your back. Place one hand on the abdomen and the other on the rib cage to check your breathing. Inhale slowly through the nose, feel the abdomen expand first, then the rib cage, and finally feel the air filling the upper chest. Your abdomen will automatically be drawn in as the ribs move out and the chest expands. Slowly exhale, emptying the lungs from top to bottom. Keep body without jerks. Try to make inhalation and exhalation uniform. Do not hold your breath in-between. Inhalation is done from the bottom up and exhalation from the top down. Repeat five times. Benefit: This is the technique you can use most often to combat the tensions and stresses in your life. You can use it anywhere, anytime to calm your mind and body. Use this technique to center yourself before your meditation and before asana practice to make them even more effective. Those who wish to learn Pranayama should approach an authentic teacher. All these practices have a deeper significance and meaning than one can imagine. 23


BUSINESS CALLED LIFE Chinese fishing nets are the signature sights of Kochi. They have been there for centuries, with their origins traced to the intense trade Kerala had with China in early days. The nets are a simple but effective tool to catch fish, especially in the coastal areas. They are fitted on teak logs and are fixed on stands, made of coconut tree, sunk in the water. The coconut tree logs must be more than 100 years old; others can't stand the saline water for long. Since the main log needs to be several meters long, and it is difficult to procure and transport them to the shore, steel pipes are increasingly replacing them. It costs around `6 lakh to make one with teak; the cost would be halved if steel pipes are used. The nets are lowered and raised several times

24


a day, with a minimum gap of four hours. It takes five people to do the job. The catch includes every variety of fish and, some times, even snakes! The proceeds from the sale of the catch vary from `100 to `5,000, and they depend on the season. In most cases, the fishermen have to fork out 30 per cent of the income to the owner of the net. The Chinese nets are facing a tough time now. Pollution has driven fish away from the shore, resulting in very little catch most of the days of the year, especially in the Kochi area. (It’s a bit better in villages such as Kumbalangi). The select coconut tree logs on which the nets stand have become hard to get these days.

Photo: Sivaram V.

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cover story

The tree of life

Today many products based on coconut – coconut oil, milk, milk powder, virgin coconut oil, dessicated coconut, coconut vinegar – are consumed all over the world 26


It is indeed a hard nut to crack. The hard exterior, though, hides a sweet and soft core – a bounty of nature, with unmatched qualities. Kerala slept under its shade for ages. Today the world is waking up to it. And entrepreneurs are busy building businesses on it

A

Aby Abraham G K

spectre is haunting the cola giants of the world. The spectre of natural drinks conquering the markets they ruled for long. And who leads the war? Lo and behold, the lowly tender coconut water! And on the home turf of the colas: the supermarkets of America and Europe. Too good to be true? Take a look at the figures. Sales of carbonated soft drinks in the US fell with sales volume decreasing 1.7 per cent from 13.8 billion gallons in 2010 to 13.6 billion gallons in 2011, according to preliminary data from Beverage Marketing Corporation, a New York-based leading research firm. They are losing market share to beverages such as ready-to-drink tea and coffee, sports beverages and energy drinks, which recorded almost double digit growth rates. At the same time, the market for coconut water beverages recorded a 100 per cent growth in 2011 with retail sales jumping to over $400 million. That too after being priced at a higher price point than carbonated drinks in these recessionary times. Even though this is just a tiny fraction of the $100-billion market for non-alcoholic beverages, the growth rates are inspiring with revenues doubling each year since 2005. The cola companies are the first to notice the change. And they have adopted one of the most accepted management principles: if you can’t beat them, join them. PepsiCo has launched 100 per cent coconut water through its premium Naked Juice brand in the US in 2010. It has also launched functional coconut water beverages under a new brand called Phenom in partnership with GNC (General Nutrition Centres), a speciality producer of nutritional products. The company has also acquired a majority stake in One Natural Experience, which retails ONE branded coconut water-based beverages in the US and Amacoco Agua de Coco da Amazonia Ltd, the market leader in Brazil – the largest market for packaged coconut water. Not to be left behind, Coca-Cola also acquired a stake in a California-based coconut water company, ZICO Beverages LLC. Dr Pepper Snapple Group Inc, the third-largest soft drinks player in the US, has entered into an agreement with All Market Inc, owner of Vita Coco, the leading coconut-water brand in the country. The trend has been similar is Europe too, where German company Green Coco Europe GmbH, which launched the product - Dr Antonio Martins Coco Juice - in 2004 is the market leader today. Nestlé too has launched products under the brand Nesfluid, which contains 50 per cent coconut water and whey. Reasons for the shift Coconut water has been a natural drink in most of the tropical countries of the world. The drink has been consumed in unpackaged, fresh condition in countries such as Brazil, Indonesia, India, Malaysia and Equador 27


for centuries. But it is only recently that it has been packaged and sold in the developed markets of the world. In India, too, tender coconut water packaged in pet bottles and tetra packs have started appearing on the shelves of supermarkets. Home grown brands such as ‘Coco Jal’, ‘Tender Coco’, ‘Tendo’ and ‘CocoZing’ are making their presence felt in export markets too.

I

t is not just coconut water that is catching the imagination of the world. Traditional medicine had vouched for the advantages of coconut-based products for long. Not surprisingly, the coconut tree was referred to as Kalpavriksha – the tree of life – in view of its many uses. But to the western world, coconut was a cholesterol-enhancing food till recently. And we too believed them. Times have changed for the better now. Its cosmetic properties has been acclaimed for long, but today many nutritionists consider coconut oil the best and safest oil to use for cooking. Doctors all over the world are today enamoured of its therapeutic qualities. From reversing Alzheimer’s and

Natural drinks account for just $400 million, a tiny fraction of the $100-billion market for non-alcoholic beverages in the US. But the revenue has doubled each year since 2005! fighting cancer to its anti-bacterial and anti-viral properties, the humble coconuts are providing encouraging news to researchers. Today many products based on coconut – coconut oil, milk, milk powder, virgin coconut oil, dessicated coconut, coconut vinegar – are consumed all over the world. In addition to the traditional markets in the Gulf, were the huge Malayali population laps up these products, new markets in Europe are opening up. Dessicated coconut is now exported to Europe from Kerala for use in chocolates. In addition to food products, other coconut products are also in high demand. Coir had long established its name as a natural fibre.

Today coir pith is used to make biomanure and exported to countries such as China. The coconut shell is used to make charcoal and activated carbon. In fact high quality activated carbon which costs around `50,000 a tonne, is the highest value-added coconut product today. It has high demand in countries such as Japan in water and air purification products. But the journey isn’t without its share of troubles. The recent recession in the Gulf and Europe has affected the business of exporters. Says Mr. Ali MM, Partner, M/s. Falcon Global Impex, an exporter of coconut products. “The economic troubles and competition from countries such as Malaysia and Sri Lanka have affected our business. We used to export many processed coconut products to the Gulf markets, but now we send only raw coconuts.” There are other bottlenecks too, scale and quality of raw material being the important ones. “A container loads up to 50,000 coconuts and we need to procure at least that number to export. It is difficult to get coconuts of the same ripeness in such a scale within a week or so in Kerala.

Friends of coconut tree

I

The Coconut Development Board has trained more than 5000 persons in coconut palm climbing and plant protection activities. Farmers can avail their services for `25 per tree 28

ncreasing the area under cultivation is not an easy option in the State where land is at a premium. Improving productivity of the trees could be the easier option. The yield per tree in the State is currently just 70 nuts. “Today we have coconut varieties which start flowering at 18 months and yield 200-300 nuts a year. So 2-3 times productivity increase is possible in the State,” says Mr Jose. In addition, varieties which yield a larger amount of tender coconut water have also been developed. To ensure the availability of quality planting material, the CDB is tying up with the post-graduate Zoology and Botany departments of academic institutions and NGOs in the State. It will provide training in hybridisation techniques, collecting seed nuts and setting up nurseries to the selected colleges to produce high quality seedlings. The CDB hopes to produce 50000 hybrid seedlings per college as part of the initiative. Shortage of climbers, affects the ability of farmers to harvest the crop at the right time. This affects their income and the availability of the produce in the market. To mitigate the shortage of climbers, CDB has come up with the “Friends of Coconut Tree” scheme. It has trained more than 5000 persons in coconut palm climbing and plant protection activities. The board has given the names of these persons along with their address and phone numbers in its website, so that farmers can contact them for harvesting coconuts. It has also fixed their charge at `25 per tree.


A major initiative of the Coconut Development Board is to form Coconut Producer Societies (CPS). Each CPS will have 4-100 farmers as members, together owning a minimum of 4000-5000 trees in a contiguous area, each farmer owning a minimum of 10 trees Moreover around 50 per cent of the coconuts from Kerala are inferior in size, and cannot be exported,” says he. The company depends on the Pollachi area in Tamil Nadu, where around 70 per cent of nuts meet the size standards for its requirements. The situation is not peculiar to Kerala alone. World over the steady supply of coconuts has been a major bottleneck for growing the industry. Brazil, the major supplier to the US market, is facing shortages today and companies are increasingly turning to Asia to meet the demand. Coconut water exports from Philippines registered a 300 per cent increase last year. The farmers in Kerala had almost given up on coconut farming, and shifted to more remunerative crops. The State’s share of coconut production in the country fell steadily from 44 per cent at the turn of the century to touch 37 per cent in 2008-09. The shortage of climbers, low prices and the diseases that affect coconut trees have been the reasons for this shift. In such a situation it is difficult to ensure adequate supply of coconuts to processing industries that come up. Even then the State still produces about 5 per cent of the total coconuts in the world. The rising demand for coconut products throws up a once in a lifetime opportunity for it.

and decreasing availability, the Coconut Development Board, the Kochi-based institution with a mandate to help the sector, has charted a slew of measures. It aims at increasing the production and productivity of coconut, ensuring availability of raw nuts for industries, promoting industries for making various products and tapping the global market. The CDB is in the process of establishing forward and backward linkages necessary to make coconut farming a viable business in the State. Be it ensuring quality seedlings, efficient cultivation practices, harvesting, processing and marketing, the Board seems to have answers for all the problems. KSIDC is also pitching in with its share by setting up a Coconut Park at Kuttiyadi in Kozhikode (see box). A major initiative of the CDB has been to form Coconut producer Societies (CPS). Each CPS will have 4-100 farmers as members, together owning a minimum of 4000-5000 trees in a contiguous area, each farmer owning a minimum of 10 trees. “Our expectation is that each CPS will be have around 50000 nuts surplus after meeting their domestic needs, during a harvesting cycle of 45 days,” says Mr T K Jose, IAS, chairman, CDB. This will ensure that the processing companies will not find it difficult to source the coconuts for processing. The CDB has already formed more than 1500

Top 10 coconut producers in the world in 2010 Country

Philippines Indonesia India

Brazil

Sri Lanka Thailand Mexico

Vietnam

Papua New Guinea Malaysia

Tanzania

Production in tonnes 19,500,000 18,319,500 10,894,000 2,759,044 2,200,000 1,721,640 1,246,400 1,086,000 677,000 555,120 370,000

Coconut Products 1. Coconut water 2. Copra 3. Coconut Oil 4. Virgin Coconut Oil 5. Dessicated Coconut 6. Coconut Milk 7. Coconut Cream 8. Coconut Milk Powder 9. Activated Carbon 10. Milk Cream 11. Coconut Chips 12. Coconut Toddy 13. Coconut Oilcake 14. Coconut Shell Products 15. Coconut Wood Products 16. Coir Pith

A new dawn With the coconut sector showing a peculiar trend—increasing demand 29


CPSs in the State. The CDB is also looking for tie-ups with management institutes in all the districts of the State to mentor the CPSs. The CDB plans to make the CPSs the core of its strategy of rejuvenating coconut farming in the country. It plans to improve productivity, reduce cost, and ensure efficient collection, marketing, processing and product diversification for

the benefit of the farmers through the CPSs. In the next step, the CDB plans to group the CPSs to form producer companies. 20 CPSs will constitute a federation and 10 federations could form a producer company. This will ensure that the company will have an assured supply of raw material – 1 crore nuts every 45 days. “We are planning to start the company

Jack of all drinks

T

here are many factors that are driving the coconut water craze around the world. The inherent qualities of coconut water and the worldwide trend toward natural foods are the main ones. The naturally healthy category accounted for almost 40 per cent of total global health and wellness sales of $223 billion. Naturally healthy beverages such as fruit juices accounted for 63 per cent of the naturally healthy category. And tender coconut water is a natural drink in this space with many advantages over the traditional fruit juices that occupy it currently. It is free of artificial colours, preservatives or additives. Says Mr Jose, “Tender coconut water is the only unpolluted, undiluted, unpoisoned drink in the world.” It is low in calories when compared to other juice products. 100 ml of coconut water has just 19-24 calories, while 100 ml of 100 per cent orange juice has 43. This makes coconut water ideal for children and for those wanting to control their weight. Another advantage of coconut water is its versatility. Coconut water has the potential to straddle different segments of the beverage industry. It is a natural fruit juice, but its unique qualities make it an excellent fit in other fast growing segments also, sports drinks being one. Tender coconut water is full of electrolytes such as potassium, magnesium, calcium and phosphorus. The Food & Agriculture Organisation describes it as a ‘natural isotonic beverage’. This makes it a natural sports drink, in contrast to the chemical concoctions that go by that name currently. That the segment has no natural products currently adds to its demand. Coconut water-based drinks can also compete in the bottled water segment – another high growth area. Different flavours can be added to them – peach, mango, pomegranate, pineapple – to create variants. It is also an excellent “mixer” for ‘smoothies’ and can be used instead of water to dilute thickness without sacrificing the product’s 100 per cent fruit juice status.

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with an authorised share capital of `16 crore. Of this, 50 per cent equity will be raised from the farmers, while efforts would be made to get a matching contribution from the government,” says Mr Jose. These companies could get into value addition of various coconut products and market them throughout the world. “We plan to increase the number of tender coconut units in the country from 7 to 100 in two years, out of which 10 will be in Kerala,” says Mr Jose. The CDB will transfer the technology developed for the same at a nominal fees to the entrepreneurs interested in setting up processing facilities. In addition, a 25 per cent capital subsidy will also be provided. The CDB is also encouraging the setting up of tender coconut water kiosks at various parts of the State. “Marketing is not a problem for the tender coconut water units as there is ready demand for the products and its sells off within hours,” says Mr Jose. The Kerala government has declared 2012-13 as ‘Ilaneer Varsham’ – year of the tender coconut water – in the State, to produce, process and promote the use of tender coconut water in the State. The early birds Spotting the potential in coconut based industries, a few entrepreneurs have already jumped into the field in the State. And the going seems to be good for them till now. One such firm is the Subicsha Coconut Producer Company Ltd - a company promoted by Perambra Block Panchayat in Kozhikode district.

The coconut shell is used to make charcoal and activated carbon. In fact high quality activated carbon which costs around `50,000 a tonne, is the highest value-added coconut product today


Integrated Coconut Park – Kuttiyadi

K

The Coconut Development Board is working on schemes to increase the productivity by two to three-fold as increasing the area of cultivation is tough, says T K Jose, chairman, Coconut Development Board The company formed by women self-help groups under the Swarnjayanti Gram Swarozgar Yojana, sells around 20 coconut-based products in the market under the Subicsha brand. “We see good demand for our products in the State. The demand in the export markets is also very encouraging,” says M Kunhammmad Master, chairman, Subicsha. In spite of these measures, it will be an uphill climb for coconuts to regain the space it once occupied. Says Mr Tomy George, an engineer by training and a coconut farmer for the past 40 years, “I do not see an increase in the area under coconut cultivation in the State, in the backdrop of the higher income from other crops such as rubber. Moreover the Land Ceiling Act which restricts the area of coconut cultivation to 10 acres per household acts as a bottleneck in expanding the crop.” Lack of effective treatments for diseases is another area of concern. Felling disease ridden trees isn’t an easy option to a farmer, who has invested much into the tree. The ability to raise intercrops such as nutmeg and cocoa add to the income potential from coconut plantation, but it just might

not be enough to lure customers from other profitable crops. Other problems are also raising their ugly heads. Recent newspaper reports cite the unscientific use of pesticides to contain diseases which could damage the health of the consumers. Unless such trends are nipped in the bud, the budding industry could get a bad reputation that is hard to rebuild. The sector is just recovering from a health scare and it could do well without another. The CDB is lobbying with the government to allow the production of ‘Neera’ – the unfermented sap of the coconut tree. “Once Neera tapping is allowed, it will change the whole economics of coconut cultivation,” says Mr Jose. 150-180 litres of Neera could be tapped from a tree in a 6 month period, providing an in-

The CDB has already approved setting up a demonstration unit for packaging and marketing Neera in Karnataka

SIDC is establishing an Integrated Coconut Park at Kuttiyadi in Kozhikode district to encourage development of value-added products from coconuts. It has already acquired 131 acres for the park in Manimala estate in Velam panchayath for the purpose. KSIDC plans to set up a technology demonstration unit on 10 acres of land in the park and lease out the remaining land to investors interested in setting up units. KSIDC is setting up a company – Kuttiyadi Coconut Industrial Park Limited – with an authorized capital of `2.5 crore for the purpose. Another `100 crore will be raised – with `32 crore coming as grant from CDB and the rest as debt from various financial institutions to set up the park. Investors setting up units are expected to bring in another `300 crore. The park will have a common facility centre, power substation, water supply and other infrastructure. The park is also expected to provide a ready market for the coconut farmers in the region. come of `30,000 per acre. Technology to preserve Neera for a period of three days to six months, has already been developed by DFRL and the CFTRI, Mysore. Canned Neera from Sri Lanka is already available in the super markets in the State. The CDB has already approved setting up a demonstration unit for packaging and marketing Neera in Karnataka. It will indeed make the climb up the coconut tree more exciting. The humble coconut has made it into the big league. It is time Kerala got more from it, than just a beautiful name. 31


When my information changes, I change my opinion. What do you do, sir?

John Maynard Keynes (1883-1946) The most influential economist of the 20th century.

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Everybody knows that technology changes business. Today, the change flows through the net. And the fact is, Kerala is the most networked State in India.

Of the 978 Panchayats in Kerala, 99% have broadband connectivity.

Information changes

Be updated

For subscription: +91 97444 17980 or subscription@economic-update.in ----------------------------------------------------------------------------------------------After all, our opinions ought to change!

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KNOWLEDGE MANAGEMENT

To swim or sink

Organisations must ensure that their knowledge base is dynamic

K

Mr S R Nair

nowledge Management (KM) is defined as the process of creating, capturing, organising, accessing and using knowledge to create customer/user value. Knowledge and information There is a tendency among people to use the word knowledge and information interchangeably as if they are synonymous. Knowledge consists of truths and beliefs, perspectives and concepts, judgments and expectations and methodologies and knowhow. Knowledge is accumulated, organised, integrated and held over long periods. Information consists of facts, figures and data that are organised to describe a particular situation or problem. There are two types of knowledge: tacit knowledge and explicit knowledge. Tacit knowledge Tacit Knowledge is not easily visible or expressible and is highly personalised. Subjective insights, intuitions, hunches, gut feeling etc form part of tacit knowledge. It is deeply rooted in an individual’s actions and experience. A doctor is often able to tell a patient what is wrong with him by simply asking certain questions, feeling the pulse and touching parts of the body. What the doctor expresses is purely tacit knowledge that is personalised and based on his experience.

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Explicit knowledge Explicit Knowledge is formal and systematic; which can be expressed in words and numbers and can be easily communicated and shared. Hard data, scientific formulae, patents, codified procedures, universal principles etc. form part of explicit knowledge. The interaction between these two forms of knowledge provides the understanding required for knowledge creation, elicitation and capture. Why knowledge management? In an intense, open, global, competitive and dynamic world, new ideas and processes are increasingly becoming the focal point of competition. Organisations that are able to reach the customers faster, more efficiently with products and services that are well matched with the needs of the consumer will benefit from competitive advantage. Thus an organisation’s ability to learn and innovate faster than the competition may be the greatest sustainable competitive advantage today. Learning and innovation are part of knowledge. This underlines the utmost requirement of knowledge management in organisations and companies. When? Finding answers to the following question should give you an indica-

In 2001, Thomas Stewart, former editor at Fortune magazine, published a cover story highlighting the importance of intellectual capital of organisations

tion about the necessity of knowledge management in place in an organisation. • When individuals leave, what percentage of knowledge of the organisation goes out with them? • How quickly can expertise be assimilated in a new organisation? • How can organisations reap big returns without reinventing the wheel every time? • When organisations undergo restructuring, can it be ensured that the existing knowledge base does not disappear with it? • When expanding the businesses, can it be done without losing the organisational culture, core values, systems and knowledge? If these questions frequent the mind, it is proof that organisations need knowledge management. Knowledge Management process • Create new knowledge • Capture tacit knowledge in explicit form (make individual knowledge available across organisation) • Organise knowledge (classify, categorise, store, retrieve and maintain knowledge) • Access knowledge (making knowledge available to the requester) • Use knowledge (in work activities, decision-making and other opportunities) Role of information technology in Knowledge Management: Information technology plays a vital role in organising knowledge, which is an integral part of KM process. Therefore, it is essential to understand the usage of technology in the knowledge management practices. Please see the matrix below.


ment system in place • Have dedicated knowledge people • Have a measurement system for KM success.

By permuting and combining the variables in the respective boxes, you will understand that for capturing, organising, retrieving and sharing knowledge and that too in specific timelines, information technology comes handy. We will also realise that without IT, the above process will be time-consuming, complex and laborious. In the dynamic world which runs in nanoseconds, speed is the essence of doing successful business. IT not only speeds up the knowledge organising process, but also increases the accuracy of information. A prime example of this case would be the Genome project in which DNA structure was revealed in the ‘book of life’. It was all about concurrent and collaborative research happening in laboratories and institutions located in almost all continents; knowledge being accessed and shared by the scientific community in such a fast pace through Internet and other communication means that the whole project got over successfully almost five years before the scheduled time of its end. And what a breakthrough research it was! Critical factors • Have a knowledge sharing culture in the organisation • Have a proper document manage-

The successful organisation of tomorrow will be the one having a proper KM network in place and will be able to put knowledge at the frontiers of innovation and customer service

How to measure the success of KM? It is difficult to measure as the concept is new, but look for trends in: • Reduction in response time to user queries • Greater clarity of approach in problem solving • Reduction in normal innovation cycle • Faster time to market • Saving of labour hours • Saving of Investment The successful organisation of tomorrow will be the one having a proper KM network in place and will be able to put knowledge at the frontiers of innovation and customer service. Myths about KM • KM should be assigned to a separate department: Everyone in the organisation must have a responsibility in promoting KM. • KM means a good information system: Information system is just a tool to ensure success of KM. By itself, it is not KM • Once initiated, KM will happen automatically: KM needs continuous monitoring and nurturing. Benefits of KM • Reduction of paper handling and error-prone manual processes • Reduction of paper storage • Reduction of lost documents • Faster access to information • Online access to information that was formerly available only on paper, microfilm etc • Improved control over documents and document-oriented processes • Streamlining of time-consuming business processes • Security over document access and modification • Provide reliable and accurate audit trail • Improved tracking and monitoring, with the ability to identify bottlenecks and modify the system to im-

Since its establishment, the KM discipline has been gradually moving towards academic maturity. The core components of KM include people, processes, culture, structure and technology prove efficiency If our country encourages a knowledge management culture within, it could positively result in: • Better quality of technical education and therefore better employability • Increase in the literacy rate • Bringing health facilities to the rural population • Improving food production and post-production efficiency • Enormous saving in R&D spending • Improving national and local governance • Reduction in poverty, child labour and corruption Conclusion Knowledge Management emerged as a scientific discipline in early '90s. It was initially supported by practitioners mostly in industries. Later, the ideas were taken up by academics. In 2001, Thomas Stewart, former editor at Fortune magazine, published a cover story highlighting the importance of intellectual capital of organisations. Since its establishment, the KM discipline has been gradually moving towards academic maturity. The core components of KM include people, processes, culture, structure and technology. Varied schools of thought on Knowledge Management exist today and once the KM discipline reaches academic maturity, we expect these to converge and then we would see highest levels of its proliferation, thereby bringing tremendous benefits and advantages to the practitioners. 35


personal finance

Union Budget

Balancing act Tax-saving tools slowly lose their sheen as smart management gains

T

he Union Budget 2012 brings some cheer to the income tax payers. Although the finance minister has put the Direct Tax Code (DTC) on hold for yet another year, the budget moves in that direction by increasing the exemption limits. The base exemption limit for income tax has been increased to `2,00,000 from `1,80,000. The highest tax slab has also been increased to `10,00,000 from `8,00,000. The base exemption limit for senior citizens (60+years) remains at `2,50,000, and that of very senior citizens (80+years) at `5,00,000. The budget has also done away with the special exemption given to women. The new income tax slabs are

Income tax rates in Budget 2012 (for individuals below 60 years of age)

Taxable Income Tax Up to `2,00,000

Nil

`2,00,001 to `5,00,000

10% of the income that exceeds `2,00,000

`5,00,001 to `10,00,000

`10,00,001 & above

36

`30,000 + 20% of the income that exceeds `5,00,000

`1,30,000 + 30% of the income that exceeds `5,00,000

Income tax rates in Budget 2012 (for individuals between 60 and 80 years of age) Up to `2,50,000

Nil

`2,50,001 to `5,00,000

10% of the income that exceeds `2,50,000

`5,00,001 to `10,00,000

`10,00,001 & above

`25,000 + 20% of the income that exceeds `5,00,000

`1,25,000 + 30% of the income that exceeds `5,00,000

Income tax rates in Budget 2012 (for individuals above 80 years of age) Up to `5,00,000

Nil

`5,00,001 to `10,00,000

20% of the income that exceeds `5,00,000

`10,00,001 & above

`1,00,000 + 30% of the income that exceeds `5,00,000

The educational cess has been retained at 3 per cent of tax. Individuals with taxable income from `8,00,001 to `10 lakh will be the biggest beneficiaries of the change in tax slabs. The changes mean a saving of `22,660 in income tax for a

person with annual taxable income of `10 lakh. Impact on equity investments The budget has retained the deduction allowed on investments in Equity Linked Savings Schemes by one more year. In addition, the finance minister has introduced another avenue for saving tax by investing in equities—the Rajiv Gandhi Equity Savings Scheme. The scheme aims to improve the breadth of the capital market by bringing new investors. The government estimates that there are around 1.5 crore tax payers with income up to `10 lakh who do not have a demat account. The scheme proposes to offer an income tax deduction of 50 per cent for investments up to `50,000 in equities, for these investors. This will be in addition to the deductions under section 80C. The investments will have a lock in period of three years. The scheme will be available only to new retail investors whose annual income is below `10 lakhs. It has also been proposed that investments under the new scheme will only be allowed in

Individuals with taxable income from `8,00,001 to `10 lakh will be the biggest beneficiaries of the change in tax slabs


the top 100 CNX and BSE companies, to ensure some measure of safety to the investors. The complete details on the scheme are awaited. To make the stock markets more attractive to the public, the budget also proposes to reduce the Securities Transaction Tax from 0.12 per cent to 0.1 per cent for cash delivery transactions. Impact on Life Insurance The budget has some negatives for the life insurance sector. In addition to the increase in service tax from 10 per cent to 12, the budget has introduced some measures that decrease the attractiveness of a life insurance policy as an investment option. It has

There is bad news for people who buy insurance policy as a tax-saving tool. After April 1, 2012, the sum assured in case of death must be at least 10 times the annual premium for the policy to be eligible for tax breaks

increased the cover requirements for a policy to be eligible for tax breaks. After April 1, 2012, the sum assured in case of death must be at least 10 times the annual premium for the policy to be eligible for tax breaks. So if the annual premium is `50,000, the sum assured should be at least `5,00,000 for the policy to be eligible for tax deduction. The multiple was 5 times till now. This means that the insurance companies will have to allot more of the premium for risk cover and less to investment. The service tax on the part of the premium that does not go for covering risk has also been increased from 1.5 per cent to 3 per cent for the first year. The subsequent premia will attract tax at the rate of 1.5 per cent as before. This proposal will make the insurance policies such as ULIPs which combine insurance and investment costlier. Impact on Health Insurance The health insurance sector has reasons for cheer though. A deduction of up to `5,000 for preventive health check up for the tax payer and spouse has been allowed in the budget. This deduction will be part of the `15,000 deduction allowed under Sec 80D for medical insurance premium. The change will make the costs incurred for pre-acceptance medical tests eligible for tax breaks. Impact on savings deposits The budget has exempted interest income from savings bank accounts up to `10,000 from tax for individual tax payers. Changes in Income Tax rules for businessmen There is some good news for businessmen, too. The budget has increased the threshold annual turnover limit for businesses required to mandatorily maintain books of accounts and have an audit done from `60 lakhs to `1 crore. They can also file their tax returns using the Sugam forms - ITR-4 or ITR-4S - and save on the amount paid to accountants and auditors.

A deduction of up to `5,000 for preventive health check up for the tax payer and spouse has also been allowed in the budget Indirect taxes What has been given by one hand has been taken away by the other. The budget proposes to raise the service tax to 12 per cent from the present rate of 10 per cent. Services account for 59 per cent of the country’s GDP today, but its share of taxes is far below potential. It is evident that, as in developed nations, the government is determined to make its cut from those who make money. So manage your money well, generate more wealth, give the government its due and enjoy with the rest. It is increasingly becoming impossible to evade paying tax with tax-saving tools.

New investment scheme

T

he budget has introduced the Rajiv Gandhi Equity Savings Scheme aimed at improving the breadth of the capital market by bringing new investors. Highlights • IT deduction of 50 per cent for investments up to `50,000 in equities • Only to new investors with income below `10 lakhs • Deduction in addition to section 80C • Lock in period of three years • Investments limited to top 100 CNX and BSE companies

37


Less is more Lesser production might just be the answer to the woes of the farming community

‘G

row More Food’ was the slogan given to farmers in the country by the government a few decades back. And quite rightly so. India reeled under food shortages in those days. The country often had to depend on food aid to feed its burgeoning population. Increasing food production was clearly the need of the hour. New varieties, new technologies, fertilisers, etc were developed and introduced in the farmlands. At the same time, the price of food grains had to be kept low to make it affordable to the poor. Subsidised fertilisers, irrigation facilities and other support systems were given to the farmers to keep the cost of production low. Productivity increased due to 38

these measures. The green revolution that followed helped the country attain self sufficiency in food grains. The country is all set to achieve a record production of food grains at 252.56 million tonnes in 2011-12. Times have changed. For the better for some, worse for others. To-

Farmers bear the brunt of the ill-effects of chemical fertilisers and pesticides. Yields have plateaued, even declined in many cases, with the soil losing its fertility

day traditional agriculture has been replaced by modern agriculture, at least in the methodology. There is an indiscriminate use of chemical fertilisers and pesticides as part of the green revolution, and it has affected the fertility and quality of the soil. The farmers also bear the brunt of the ill-effects of chemical fertilisers and pesticides. Yields have plateaued, even declined in many cases, with the soil losing its fertility. Agriculture is being corporatised. Of late, high yielding seeds, many of which have been genetically engineered, have been brought out in the market by multinational companies. These often have a seed-fertiliserpesticide lock in – you have to use fertilisers and pesticides specified by


the company itself to get the desired yield. This increases the cost of farming and puts farmers at the mercy of multinationals. At the same time, the government which spent huge sums to make the shift to modern agriculture happen is slowly and steadily withdrawing its support, leaving the field open to market forces. Subsidies are subsiding. Efforts are on to reduce or do away with it. As a result, the price of agricultural inputs such as fertilisers has increased considerably. In short, farmers have been left in the lurch after being led to a high-cost version of agriculture. But the burden of feeding the population remains on the farmers. The prices of food items are a politically sensitive issue, and hence the governments will resist increases in them. Farmers are often told to make farming profitable by increasing productivity and production. A bumper harvest is a farmer’s dream. Conventional wisdom tells us that more output means more money. The government has also been selling this thought to the farmers for quite some time now. As a result, farmers have been conditioned to produce more. Increasing production is definitely good for society as a whole. And governments have the duty to do what is good for society as a whole. But the plight of farmers remains pathetic in spite of the increases in productivity and production. It is estimated that over 2.5 lakh farmers committed hara-kiri in the country in the period from 1995-2010. And it continues even today. Without respite. Some believe that this spate of

It is estimated that over 2.5 lakh farmers committed hara-kiri in the country in the period from 1995-2010. Some believe this tragedy has no parallels in human history

suicides does not have parallels in human history. Clearly the increase in production hasn’t benefitted the farmers. Profitability of farming remains a mirage for most of the farmers in the country. With governments backing out of their responsibility to support agriculture, it is the duty of the farmers to secure their own interests. And the best way to do this is to shift to markets’ ways. They should drop unnecessary sentiments and cultivate crops based on a market study and profitability estimates. They should move away from crops where they do not have a competitive advantage. The shift from rice to rubber in Kerala is a case in point. They should learn to put their own security above that of people who don’t give a damn about their plight.

In a market-determined system, producing more is not an optimum solution for a producer – farmers included. Overproduction often leads to a crash in prices. Instances of farmers dumping their produce in times of bumper harvests are not too uncommon in the country. The lack of adequate storage, processing and marketing facilities in the country complicates the situation. There are other problems too with increasing production. It might require more inputs, and the marginal cost of production – cost of producing one extra unit of the product – might increase after a point of time. Increasing production after this point is to invite losses. The farmers should organise themselves to gain bargaining power in the market. This would help them negotiate better terms with their suppliers. This would also help them regulate the output and control the supply of products available in the

Farmers should move away from crops where they do not have a competitive advantage. The shift from rice to rubber in Kerala is a case in point market, thereby realising better prices for their products. A case in point is the International Rubber Consortium (IRCo), which has four of the five major rubber producing nations - Thailand, Malaysia, Indonesia and Vietnam as its members. IRCo determines the supply of rubber from these nations in the world market. Recently, under the guidance from IRCo, farmers from Thailand cut the supply of rubber by 25 per cent to stem a decline in prices. They did this by restricting tapping to 15 days a month, instead of the usual 20 in the season. The strategy helped them avoid a steep drop in the price of rubber, even when the world fell into a recession. This is something that happens in any industry in the world today. Companies cut production when the going gets bad. And increase prices when the demand is good. That is how businesses operate in a market economy. It is time farmers too learned the game for their own survival. Lesser production often means higher prices and profitability with lesser effort. Man cannot survive without food. They should be willing to pay the right price for the produce. Markets have a means of regulating the price of the commodities in it based on demand and supply. Farmers should to show the courage to use it to their advantage. Ensuring the food security of the nation is not the responsibility of the farmers alone. Society has to come up with ways for achieving the same. It has the responsibility to ensure that farming is a viable source of livelihood. Till that happens, farmers will do well to live with the motto ‘Less is more’. 39


Kerala statistics

Migration from Kerala K

eralites have been migrating to all parts of the world for quite some time now. A recent study by Centre for Development Studies, Thiruvananthapuram,

Migration to foreign countries Emigrants from Kerala living abroad Emigrants who have returned and live in Kerala

% of households with emigrants

18.2

% of households with NRKs

27.1

Emigrants by religion Muslims – 44.6% Hindus – 37.5% Christians - 17.9% Emigrants by countries United Arab Emirates - 38.7% Saudi Arabia - 25.2% Oman - 8.6% Qatar - 6.5% Kuwait - 5.6% Bahrain - 4.5% US - 3% UK - 2% The Gulf region accounts for around 90 per cent of the external migration from Kerala. But the demographic transition in Kerala and the declining wage differential among unskilled workers in the Gulf and Kerala are set to change this trend. 40

reveals some interesting trends. It reveals that Keralites prefer migrating to other countries than to other States in the country. The number of migrants who return to Kerala

from other States is also showing a decreasing trend, as more and more people prefer to stay back in their host States.

2011

2008

2003

1998

1.15 million

1.16 million

0.89 million

0.74 million

2.28 million

2.19 million

1.84 million

2011

2008

`63,315

`57,227

Total Remittances to Kerala `49,695 crores Remittances/household

1.36 million

`43,288 crores


Internal Migration from Kerala Migrants from Kerala living in other States in India

Internal migrants who have returned and live in Kerala

2011

2008

2003

1998

9.31 lakh

9.14 lakh

11.15 lakh

6.91 lakh

5.11 lakh

6.86 lakh

9.94 lakh

9.59 lakh

By religion Muslims – 13.7% Hindus – 59.7% Christians - 26.6% By region Palakkad and Kottayam lead other districts in the State in the number of internal migrants. Pathanamthitta district, which led all districts in 1998 in the matter of internal migration, is almost at the bottom of the list in 2011, thanks to the demographic change. Internal Migration to States Karnataka is the preferred destination for internal migrants from the State accounting for 29 per cent of them. Tamil Nadu and Maharashtra are other favoured destinations. 41


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`:50 US:$5 RNI No. KERENG02297 Enterprise and Economic Update Kerala, a venture supported by KSIDC


Enterprise &Economic Update Kerala