In 2003 the Kerala government selected several villages as model villages. The Kumbalangy Integrated Tourism Village project is meant to transform the tiny island into a model fishing village and tourism spot. The panchayat (village council), with financial assistance from the state government, is implementing the project.

"The Kumbalangy project was set in motion in 2003 to help the local people, the economy and the locality through tourism," says M C Sivadathan, President of the Kumbalangy panchayat. "And in order to achieve this, we have done away with many concepts typical of tourism elsewhere. Our idea is to create job opportunities for the villagers, while also ensuring that tourists have a good time seeing and experiencing real village life," he explains.

Currently, ten houses offer rooms to visitors. This facility is generally within a residence, where two or more rooms with attached baths are set aside for guests. The tourists sit with the host family and eat the same food. They can walk through the village, watch fishermen at work, fish themselves, go canoeing and visit the farms. Tourists also find that there is no huge communication gap, because at least one member in a family, if not all, can converse in English.

Under the Kumbalangy project, Kalagraamam, an artists' village, is also being set up. The initial plans were to erect a cottage in the middle of the backwaters. Later, the panchayat members, tourism secretary and the tourism minister all agreed that this would disturb the backwaters ecology. Kalagraamam, therefore, will now stand on four acres of land inside Kumbalangy. It will showcase the traditional fishing equipment and handicrafts of the region.