Drought pulls down Karnataka growth to 9.6% from 10.4%

BENGALURU: Farmers’ distress has rubbed off on the state’s economic performance, and is expected to pull down the overall growth to 9.6% from 10.4% in the previous year, even as other sectors are poised for decent growth.

The 2018-19 Economic Survey released Friday estimates agricultural sector to post a negative growth of 4.8% in 2018-19 compared to 14.2% in 2017-18. Chief minister HD Kumaraswamy attributed the degrowth to the drought situation.

The survey estimated that Karnataka’s GSDP to be Rs 10.8 lakh crore in 2018-19, compared to Rs 9.9 lakh crore the previous year. The dip in the growth of the agricultural sector is on account of fall in production: 100 lakh tonne from 144 lakh tonne in 2017-18.

This means that the government faces several fiscal challenges arising from limited upside potential for resource mobilisation relative to the GSDP. “Rigidities in the form of committed expenditure and weak linkages between expenditure and development outcomes will be challenging,” the Survey points out.

“Karnataka has traditionally been prone to recurring drought, but that said, as a state becomes more and more industrialised, dependence on agriculture for growth must come down. The fact that there has been an adverse impact calls for agricultural reforms,” former chief secretary A Ravindra said.

However, the survey points out that despite the dip, Karnataka’s growth rate will be higher than the national GDP, which is poised to grow at 7.2%.

Analysis of the past few years’ performance shows that the GSDP grew at 9.6% in 2013-14, while dipping to 6.2% the next year. From 6.2% in 2014-15, it recorded a massive 5% jump to post a 11.1% growth in 2015-16, to dip again to 7.6% the next year.

The industry sector is estimated to grow at 7.4% against 4.7% in the previous year, while the services sector is expected to record a flat line, growing at 12.3% compared to 12.2% the previous year.

While these are calculations made at constant prices of 2011-12, even estimations at the current price shows a decline in growth rate. At current prices, the GSDP is expected to grow at 13.9% compared to 14.7% in 2017-18.

Further, revenue receipts for the year increased to Rs 1.7 lakh crore from 1.5 lakh crore in 2017-18, riding on increased tax revenue. The per capita state’s own tax revenue increased to Rs 15,657 from Rs 13,669 in the previous year at a rate of 16%.

Overall, the state’s own tax revenues increased to Rs 1.06 lakh crore from Rs 62,604 crore, registering a compound annual growth rate of 11.2%. Also, for the first six months 2018-19, value of exports stood at Rs 3.2 lakh compared to Rs 5.4 lakh crore for the whole of 2017-18.