BENGALURU: Karnataka , which compared the states, described Karnataka as the second best-performing state over these six years when growth is combined with two other critical macro parameters — Inflation and fiscal deficit. . Only Gujarat ranked above it.
TOI reported previously that between 2016 and 2018, the state had attracted the highest amount of investment proposals. In 2017, it attracted as high as 44% of the total investment intentions in the country. Last year, this figure was about 25%.
Unlike Gujarat, Karnataka’s growth has been led by its services sector, and much of this services sector growth would have come from the IT sector. While agriculture and industry are growing at 4-5% or less, the services sector grew consistently between about 8.5% and 10.4% during this period.
Karnataka has over 3.5k IT firms contributing to $32bn exports
The IT sector, which accounts for close to 20% of state GDP, has been growing similarly. Karnataka is home to over 3,500 IT companies, contributing to over $32 billion of exports.
Volvo India MD Kamal Bali, also chairperson of the Karnataka State Council of industry chamber CII, said the services sector contributes twothirds to the state’s GDP. “It’s the ecosystem built over many years that is making it an attractive proposition for companies and investors to put the state at the centre of their growth story. Bengaluru has a good mix of skills in newer areas like IoT, AI, machine learning, offering global firms a quick, ready talent pool,” he said.
Bali said Karnataka has developed its capabilities in newer clusters like aerospace and automotive. The Belagavi aerospace
SEZ and the Devanahalli aerospace SEZ have drawn significant investments. Honda’s Narsapura plant is now its biggest for twowheelers in the world.
Infosys co-founder Kris Gopalakrishnan, who has also been active in industry associations, attributed Karnataka’s success to the innovative companies in IT and biotech, and the many startups that are further catapulting this growth. He said the state government too has taken a number of measures to nurture innovation and entrepreneurship. The state has been a pioneer in framing policies for IT, semiconductors, startups, and even electric vehicles.
The government has done all of this by keeping its fiscal deficit well within the limit of 3% of state GDP — a limit that’s seen to be necessary for long-term sustainability. This would have been possible only because it also succeeded in raising sufficient resources.
However, the farm crisis and the government’s move to waive farmers’ loans suggest that all is not well. It remains to be seen how much the waiver would impact other investments, and, in turn, the state’s overall growth. There’s also the issue of lopsided growth. Much of the growth is being driven by Bengaluru, and the IT sector.
Source: timesofindia.indiatimes.com