Karnataka's economy set to register 7% growth in FY15

Growth in GSDP is backed by services sector, growing at 8.9% in 2014-15

Aided by the revival of services and industry sector, the gross state domestic product (GSDP) of Karnataka is expected to grow at 7 per cent in 2014-15 compared to 5 per cent in 2013-14. The GSDP growth rate at constant prices is expected to reach Rs 344,106 crore in FY15 from Rs 321,455 crore in FY14.

The contribution to the growth rate is mainly due to the services sector doing well, growing at 8.9 per cent, which is higher than the growth rate of 8 per cent recorded in the previous year, according to Economic Survey of Karnataka for 2014-15, which was tabled in the state legislative assembly on Friday. The services sector continues to be the largest contributor to the state economy.

The GSDP growth rate of agriculture and allied activities is expected to decrease by 4.5 per cent in the state during 2014-15 as against a growth of 9.4 per cent during 2013-14. The fall in the growth rate of agriculture and allied activities during 2014-15 is due to decline in the production of food grains by 3 per cent. The agriculture sector suffered a setback due to drought in many taluks during the year.

Primary estimates based on the progress in area coverage under various kharif and rabi crops shows a likely loss in yield on account of long dry spell and excess rainfall in some parts indicate shortfall in production of food grains at 11.47 million tonnes against the target of 11.91 million tonnes of cereals and 1.52 million tonnes of pulses against the target of 1.58 million tonnes for the year. Industry is expected to grow at 4.4 per cent during 2014-15, higher than the growth rate of 4.2 per cent that was observed in 2013-14.

A marginal decrease in the composition of GSDP of agriculture and allied activities and service sector is evident from 17.1 per cent and 58.2 per cent in 2013-14 to 17.5 per cent and 59.1 per cent in 2014-15 respectively. At the same time, the marginal decrease is seen in the composition of industry sector from 23.7 per cent in 2013-14 to 23.4 per cent in 2014-15.

The per capita state income (i.e. per capita NSDP) of Karnataka at current prices is estimated at Rs 100,594 during 2014-15 as against Rs 89,545 in 2013-14, an increase of 13.5 per cent. The per capita income at constant prices (2004-05) for the year 2014-15 is estimated to increase to Rs 48,907 as compared to Rs 46,012 achieved in 2013-14.

State finances
The state’s revenue resources are showing signs of recovery from 16.07 per cent in 2011-12 to 16.21 per cent in 2014-15 (BE). The state’s own tax revenues increased from Rs 27,646 crore in 2008-09 to Rs 69,870 crore during 2014-15 (BE) at a CAGR of 16.71 per cent. The share of development expenditure has significantly increased from 10.07 per cent in 2008-09 to 13.74 per cent in 2014-15 (BE), while the share of interest payments for the same period have declined from 1.69 per cent to 1.42 per cent.

Karnataka's plan achievement is impressive and plan expenditure has revealed a growth over the years and the state has one of the highest per capita plan expenditure among major states in the country at Rs 7,472 in 2013-14 (BE).