Deloitte report highlights regional imbalances in spread of industries

| Updated on: Dec 16, 2013

Karnataka grew at 6 per cent over the last five years, lower than the national average of 7 per cent and much lower than the select set of comparison States – Andhra Pradesh, Tamil Nadu, Gujarat, Kerala and Maharashtra.

According to Deloitte’s report on Karnataka, released at BCIC’s Karnataka Economic Summit, as per the advance estimates for the year 2012-13, state GSDP will amount to Rs 303,444 crore in 2012-13 (at 2004-05 prices), depicting a declaration in growth rate of GSDP from 6.4 per cent in 2011-12 to 5.9 per cent in 2012-13.

Industrial lag This deceleration in growth rate has been as result of slower growth of the industry sector (from 3.6 per cent to 2.4 per cent) between 2011-12 and 2012-13. In addition, there was a slight decrease in the growth rate of the services sector from 9.5 per cent to 8.9 per cent.

The agriculture sector is expected to recover from negative growth rate of 2.9 per cent in 2011-12 to grow at 1.8 per cent in 2012-13.

Per capita income of the state was 77,015 in 2012-13 (at current prices). Though this is higher than the national average of Rs 68757, it is one of the lowest per capita incomes among the comparission states.

Among these states, maharastra has the highest per capita income of Rs 107,670 followed by Tamil Nadu with 98,550. Karnataka’s per capita grew at 4 per cent while at the national level the per capita income grew by 5 per cent.

Decline The long term changes in sectoral composition from agriculture and services sectors are in conformity with structural changes in fast developing countries.

“The decline in the contribution from industry sector is, however, a matter of concern for the state,” said Deloitte’s report.

According to Karnataka Economic Survey 2010-11, a higher and faster economic growth needs considerable revival of growth, not only in the agricultural sector with more investment and productivity but also realisation of higher growth rates in the industry sector.

Challenges Agriculture: Land fragmentation - with increasing number of marginal holdings and decreasing number of large and medium holdings, the average size of holding has declined from 1.95 hectares in 1995 to 1.7 hectares in 2005-06. Stagnant yield of food grains – the share of cereals in gross cropped area has remained relatively constant between 2004-05 and 2009-10 while that of food grains has declined this period.

Industry: Stagnant contribution to GSDP during the 11 Five Year plan period additional workforce expected to move from agriculture to manufacturing sector. Regional imbalance in spread – industries concentrated around Bangalore urban and reural districts in terms of income, number of units and employment.

Services: Within the services sector, there is a significant proportion of wmplyment in the unorganised sectors. These unorganised sector workers are often illiterate, low skilled and engaged in low quality and low productive jobs with poor working conditions.

Published on December 16, 2013

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