Kalavathi is a folk tale about a dispute between two goddesses, Lakshmi and Saraswathi. Who is superior — the Goddess of Wealth or Learning? To find out, the two pick an illiterate and stupid farmer (Durairaj) and begin trying their powers on him. While tilling the land, the farmer finds blocks of gold about which he knows nothing and throws them back into the field! Now, Saraswathi bestows on him the knowledge to recognise gold and he begins to collect gold every day. An evil minister (Sahadevan) who watches him throwing the gold blocks takes him to his kingdom to exploit his powers. The princess (Jayalakshmi) falls in love with him, but the minister lusts after her. Knowing his rare powers, the king makes him sit on the throne and the evil genius tries his best to exploit him. Kalavathi is shocked by her lover being stupid and clever by turns! However, the problems are solved and the couple is blessed with both riches and intelligence!