Kerala economy revs up as Onam nears

Written by M Sarita Varma | Thiruvananthapuram | Updated: Sep 2 2011, 02:23am hrs
It is the turn of motorbuffs, during this Onam season to vie with boozers in lavishing a badly-needed feast to Kerala coffers. Compared to the R30-40-crore tax revenue from IMFL during Onam season, the motor market is revving up to tinkle the state governments cash registers with at least R100 crore in motor vehicle tax in the mid-August to September 9 period alone.

Not just car sales, but TV and consumer durables too are counting on brisk sales in its pre-Onam days this time, because of the permutations of Malayalam calender year stretching the festival season to a daisy chain of three weeks. Last year, Onam market season had shrunk to a paltry patch of 10 days, beginning with mid-August and Thiruvonam grinding to a halt, even before you could spread out the discount platter to its full flourish.

A K Kalanadhan, motor insurance consultant says that the whirlwind sales of cars in the current week has been more work than the main insurance company officials in the State could tackle. Most of the car dealers have enrolled extra staff in August to process the seasonal demand spurt, he told FE.

Dhrubasish Bhattacharya, vice-president, Kolkatta-based Magna Fincorp points out that the company has been seeing at least 50% growth in car finance in Kerala. This has necessitated more staff, he says.

A conservative market estimate is that at least 17,000 new cars will roll on the Kerala roads in a week or two. This would fetch R600-650 crore in sales to car companies and R100-120 crore in motor tax revenue to state exchequer.

Besides the R30,000-crore worth NRI remittances, there have been reports of spurt in unaccounted money flow. There is five-fold rise in enforcement cases related to hawala transactions in Kerala, in the recent months. Given the states intense relationship with Gulf economy, the petrol price hike has not given a shakedown to the luxury goods appetite of NRI kin.

Another reason is the continued robust market in rubber in 2011, jacking up consumer appetite among middle class. In the last couple of years, over 30 new car sales outlets have mushroomed within 30 km radius of Kottayam, countrys natural rubber hub.

The state finances, however, had been in bad shape, suffering immediate outgo of R 2154.8 crore to accomodate outstanding commitments, said KM Mani, state finance minister.