Mr Sharmila arrived in the settlement via Coimbatore in Tamil Nadu on her first visit to Kerala.
The 'Iron Lady' of Manipur said she would continue her fight for human rights and protecting of democratic values.
When asked about her poll debacle, she said "Nothing much constructive and transparent system in the political arena will be seen... Because, elections are based on money and muscle power."
Ms Sharmila, who went on fast against AFSPA for 16 years, had contested from Thoubal constituency against Chief Minister Okram Ibobi Singh but was relegated to the fourth position.
Though she was sure of defeat, the magnitude of the outcome was unexpected, she said, adding that she was not in the election arena for creating her vote bank.
Making it clear that she had not given up her fight, Ms Sharmila said, "I will continue my fight for human rights and for protecting democratic values with more vigour after I return from here."
She also said she was happy to be in Kerala, from where she had got lot of support for her fight against AFPSA.
The activist said she would also use the opportunity to study the problems of tribal people of Attappady, where large number of infant deaths has been reported in recent time.
Earlier, speaking to reporters in Coimbatore, she reiterated that elections were based on money and muscle power.
She said "the people of Manipur are on the path of realisation and they will come to know about this soon.