Karnataka growth rate will fall for 3rd straight year

BENGALURU: Karnataka is expected to grow at 6.8% this fiscal, which is higher than the national growth rate estimated at about 5%, but lower than the 7.8% recorded in 2018-19. What should have the government worried is that the growth is decelerating for the last three years, even if that is in line with the national GDP (gross domestic product) trend.
The growth this fiscal is being fueled by the agriculture sector.It is estimated to grow at 3.9%, compared to the de-growth of 1.6% last year. The improvement is due to increased food grain and oil seeds production, according to the Economic Survey, which was issued on Wednesday along with the budget.
Food grain production will rise to 136 lakh tonnes from 128 lakh tonnes while oil seeds will rise to 56 lakh tonnes from 51 lakh tonnes. The livestock sector, comprising of milk, egg and meat production, and fisheries have also recorded healthy growth.
The industrial and services sectors slowed down. Industry, comprising of mining & quarrying, manufacturing, construction and electricity and others, is expected to grow by 4.8%, against 5.6% last fiscal. Among the worst hit is the construction sector, which will grow at just 2.4% compared to 6.3% last year. A prolonged slump in the residential real estate sector due to lack of demand is the main factor behind this.
The services sector, the biggest contributor to the state GDP, is also expected to witness a fall in growth rate to 7.9% from 9.8%, recording its slowest growth rate in at least five years. The IT and technology sector is the biggest contributor to this segment. Growth in computerrelated services was down to 10.7% from 13.4%, while that in real estate services fell to 3.8% from 6.5%.
The state’s revenue increased 9.6% to Rs 1.8 lakh crore due to a rise in tax revenue, the survey added. Tax revenue rose about 12% to Rs 1.2 lakh crore. But the report showed concerns over the ratio of non-tax revenue to receipts which has been declining over the years due to low recovery of costs, poor performance of public enterprises and “uneconomic pricing of implicit subsidies and lack of regular and periodic monitoring by the administrative departments.”