Demonetisation hits state's economy

The demonetisation had a 'severe' impact on Kerala as 56 per cent of its economic activity was hit, besides causing a dip in tourism revenues and remittances, important drivers of growth of the state's economy, according to Economic Review for the 2016-17.
"Thus 56 per cent of the economic activity of Kerala was immediately affected by the withdrawal of the specified bank notes. It also affected earnings from tourism and in the flow of remittances", The economic review placed in the assembly said.
As per quick estimates relating to the corresponding month of the previous year, domestic tourists fell by 17.7 per cent in November 2016 and foreign tourist arrivals by 8.7 per cent, the report said.

The corresponding figures for October 2016 were a positive 5.2 per cent and 6 per cent respectively, the report pointed out.
Pointing that the impact of demonetisation in terms of cash deficit and its consequences was particularly severe in the state also because of the distinct character of its banking sector.
Around 60 per cent of all deposits are in the co-operatives in the state and decision of RBI to keep co-operative sector from note exchange process led to closure of banking activities at the level of Primary Cooperative agriculture societies and targeted their credibility.

Demonetisation also affected remittances due to the difficulties in withdrawal from banks, the survey said.

With regard to the growth of Gross State Domestic Product (GSDP), the report said at current prices, the GSDP showed a growth rate of 11.85 per cent during 2015-16 as against 2014-15.
However, the growth rate of Net State Domestic Product at current price is 12.28 per cent in 2015-16 compared to 13. 37 per cent in 2014-15, the report said.
Total public debt of the state stood at Rs 176838.64 crore registering a growth rate of 12.37 per cent in 2016-17 (budget estimates).
The debt of the state was Rs 157370.33 crore in 2015-15.