The crucial Karnataka election has reached its climax. And, whoever forms the government, there will be some immediate economic challenges even as Karnataka is third fastest growing state with strong macroeconomic fundamentals. Karnataka’s Gross Domestic Product (GDP) grew at an average of 7.68%, which is the third fastest among 20 states included in a report published by Ind-Ra.
Despite posting power-pact performance for years, Karnataka’s new government will have a slew of challenges to deal with in next five years, ranging from farmers woes to fiscal prudence.
India faced two consecutive years of drought, which aggravated agrarian crisis in many states, including Karnataka. Over 35,000 farmers committed suicide between April 2013 and November 2017, of which nearly 2,500 were suffering from crop failure and drought. The number of farmers’ suicide in Karnataka was second highest after Maharashtra, according to NCRB data.
Karnataka is predominantly agriculture-based with more than 70% of its population depending on agriculture and its allied activities. 70% of the cultivable land in Karnataka is depending on low and erratic rainfall. One way to reduce farmers’ woes is to develop watershed development, the state economic survey had suggested earlier this year.
The cost of industrialisation:
Karnataka economic growth has been due to rapid industrialisation in the state. But the cost of industrialisation is hazardous processes, usage of hazardous chemicals and raw materials. Since Karnataka’s industrial sector is the second largest employer in the state, it is “essential to ensure occupational safety and health of workers in the factories at the workplace”, the economic survey said.
Karnataka so far has maintained a fine balance between all with an average expenditure of 6.3% on roads & bridges. However, a lot more effort is needed as there are disparities in the road network in the State in inter-district connectivity of National Highways and State Highways. “Rapid development of roads can have a multiplier effect on the overall growth of backward regions,” the Economic Survey said.