There has been a significant increase in the college seats available in undergraduate engineering degree programmes in Kerala. This has happened by licensing a number of privately-owned engineering colleges. Consequently, enrolment in engineering increased from about 2,800 in 1991 to about 28,000 in 2008. After a careful analysis of a unique data set, this study reaches the conclusion that actual out-turn rates have been steadily declining, especially since 2004. This decline is observed at the aggregate level, across different branches and also across different colleges. It then hypothesises about the probable causes for this steady decline in out-turn rates and concludes with the larger implications of this state of affairs.