Kerala needs 7% growth, more investment to create jobs: KM Chandrasekhar
Speaking at the India Today Conclave – South 2026, KM Chandrasekhar, Vice-Chairperson of the Kerala State Planning Board and former Union Cabinet Secretary, said Kerala needs to target 7% annual growth and significantly increase investment to create jobs and build sustained economic momentum.
Chandrasekhar said Kerala's economic challenges include high public debt, low capital expenditure, slower services growth and high unemployment.
He said the state needs to change its approach to economic planning and focus on measurable outcomes.KERALA NEEDS 7% GROWTH
Chandrasekhar said Kerala wants to raise its gross state domestic product (GSDP) from around Rs 16 lakh crore at current prices to Rs 28 lakh crore, which would require annual growth of around 7%.
“We would like to completely upend the usual characteristics of the plan. We would like to first of all state on what objectives we are going to achieve,” he said.
Chandrasekhar said the 7% target was achievable, pointing to Kerala's earlier growth performance.
“That is not unrealistic because we have achieved 8% between 2004-05 and 2012-13. And the country itself is talking of going at 8% per annum growth,” he said.
However, achieving this target would require a major increase in investment. He said Kerala would need investment equivalent to 28% of its GSDP every year, compared with capital expenditure of around 1.34% currently.
Chandrasekhar said the state government alone cannot provide the investment needed to support the growth target. Kerala will have to bring together the private sector, local bodies, cooperatives, non-resident Keralites, public-private partnerships and central funding.
“Private sector will have to play a major role,” he said.
He also said Kerala had not been using central funds effectively and needs to improve its ability to tap such funding.
The planning process itself is also being redesigned around what Chandrasekhar called the “SMART” model, where projects would be specific, measurable, achievable, result-oriented and time-bound.DEBT NEEDS TO BE USED PRODUCTIVELY
Chandrasekhar said Kerala's debt burden is a concern, but argued that borrowing itself is not necessarily the problem. The focus should be on how borrowed money is used.
“Debt is taken by all countries. But the point is that we need to use the debt productively. To generate the income required to pay it back,” he said.
He said Kerala's debt was around 35% of GSDP, which he described as the highest among states.
“If you just take debt, use it for your revenue expenditure, use it for areas where there is no return coming, then debt is a problem,” he said.
At the same time, Chandrasekhar said the state needs a gradual path to bring down its debt rather than attempting an abrupt correction.JOBS REMAIN A MAJOR CHALLENGE
Chandrasekhar identified unemployment as one of Kerala's biggest economic challenges. He cited an unemployment rate of 29.8% for the state against 12.5% nationally.
“Our goal would be to halve that rate within the next five years,” he said.
He said Kerala would need to look beyond traditional industrialisation and identify sectors capable of generating employment and investment.
Medical devices, gold, furniture, aviation, space, artificial intelligence, high-value tourism, sports and the creative economy were among the sectors he identified as having potential.
Chandrasekhar said Kerala already has around 110 medical device units, while startups and small industries have also expanded.
The state has also introduced measures such as the SERAL scheme and the Invest Kerala single-window system to make it easier to start businesses.
“It will take time, it will take effort, and it will take a whole lot of joint endeavour by all the people of Kerala to reach where we want to reach,” he said.- Ends
