Five years plan and inclusive growth in Karnataka

Five years plan and inclusive growth in Karnataka

Karnataka is one of the fastest growing states in India. The natural resources, policy incentives and infrastructure in the state favour investments in the IT/ITeS, biotechnology, engineering, electronics, automotive, textiles, agri and food-processing sectors.

Between 2011-12 and 2017-18, the GSDP of the state grew at a Compound Annual Growth Rate (CAGR) of 13.11 per cent to reach Rs12.69 trillion (US$ 196.88 billion) and the net state domestic product (NSDP) grew at a CAGR of 12.83 per cent to reach Rs 11.45 trillion (US$ 177.68 billion).

Karnataka’s favourable policies have encouraged industries to set up their research and development (R&D) centres in the state. The state has about 401 R&D centres, the most in India. Around 400 of the Fortune Global 500 companies outsource their IT services to firms in Bengaluru.

Karnataka is making significant investments in industrial infrastructure, such as setting up industrial clusters and SEZs and public-private partnership (PPP) projects to provide an impetus to further industrial development.

The upgraded Belagavi airport was inaugurated in September 2017. Modernisation of the airport was done at a cost of US$ 18.67 million and it now has capacity to handle over 300 passengers.

In October 2017, the government approved setting up of a new industrial park in Harohalli. The proposed multi-product industrial park will be built by Karnataka Industrial Areas Development Board (KIADB) on an area of about 904.86 hectares with an investment of US$ 242.8 million.

A 300-acre SEZ has been created in Belgaum to develop a precision engineering and manufacturing supply chain ecosystem, which would be a great driver for manufacturing industries.

The start-ups warehouse set up by the state government in association with National Association of Software and Services Companies (NASSCOM) has attracted 170 start-ups.

Under the New Textile Policy 2013-18, the government plans to invest US$ 1,650 million in the textile sector. The policy offers various incentives for investments in the textile sector; these include credit linked capital subsidy, entry tax reimbursement and power subsidy.

In September 2017, the state government passed the ‘Karnataka Electric Vehicle and Energy Storage Policy 2017’. Electric Vehicles manufacturing in Karnataka is expected to attract investments worth US$ 4.82 billion and create 55,000 jobs. Also, a new Animation, Visual Effects, Gaming and Comics (AVGC) policy has been introduced for 2017-2022. The policy aims to encourage and support appropriate manpower development, infrastructure development and business development in the AVGC sector.



Agriculture is the mainstay of the people in the state. Cultivators and agricultural labourers form about 56 per cent of the workforce (2001 census). Agriculture in the state is characterised by wide crop diversifi cation. The extent of arid land in Karnataka being second only to Rajasthan in the country, agriculture is highly dependant on the vagaries of the southwest monsoon. Out of the net area sown, only 25 per cent is irrigated.


In 1957-58 to 26.4 lakh hectares in 2000-01. By 2000, the state had invested about Rs.14,267 crore, of which Rs.13,399 crore was spent on major and medium irrigation and Rs.868 crore on minor irrigation. At the end of March 2001, the irrigation potential created by major, medium and minor (surface water) irrigation was about 18.11 lakh hectares out of a projected 29.73 lakh hectares potential. The irrigation potential from all sources is estimated at 55 lakh hectares and the potential created up to 2003-04 is 30.61 lakh hectares.1 The total potential of exploitable water resources in the state is about 36.22 lakh hectares (including ground water, which irrigates 9.08 lakh hectares). The present proportion of net area irrigated to net area sown is about 25 percent.


Karnataka, a pioneer in industrial development, now stands sixth among the states in terms of output. It has a strong and vibrant industrial base built up over the years with a wide network of large and medium industries in the public and private sectors and a large small-scale industrial sector. The annual average growth of industrial production was 6.63 per cent (base year 1993-94) between 1994-95 and 2003-04. The Economic Census 1998 reveals that there were 19.12 lakh enterprises in the state, engaged in various economic activities other than crop production and plantations. The number of enterprises increased by 12.9 per cent, from 16.94 lakh in 1990 to 19.12 lakh in 1998, while the number of persons usually working in the enterprises increased by 3.3 per cent, from 50.83 lakh to 52.53 lakh. Karnataka accounted for 8 per cent of all-India enterprises and 8.15 per cent of total ‘usually working’ employment.

Agricultural production and productivity in the state have received a tremendous setback in recent years (2001-02 to 2003-04) due to the continuous prevalence of drought conditions. Thereafter, agricultural production, particularly cereals, has improved due to relatively good monsoons in the year 2004-05. Food grain production is expected to reach about 97 lakh tonnes against the target of 108.17 lakh tonnes in 2004-05. The vast extent of dry, unirrigated land, located primarily in northern Karnataka, casts its long shadow on the socio-economic development of the local people in many signifi cant ways, as the Report shows.




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