Madhusudhanan S
Karnataka is the third largest state GDP contributor to India, as per recent reports.
The IT hub of India is home to the fourth-largest technology cluster in the world. The resilient IT as well as Tourism and Industries sectors are driving economic growth in the country.
Sector-specific Special Investment Regions (SIRs) and Special Economic Zones (SEZs) are accelerating this growth.
Karnataka, known as India’s Knowledge Capital, has effectively attracted skilled labour, especially in the knowledge sector. It is one of the states that contributes significantly to the nation’s medical technicians, engineers, and a large number of doctors as well.
State’s Gross State Domestic Product (GSDP) and Per Capita GSDP
The State’s GSDP is estimated to be Rs. 28.09 trillion at current prices (US$ 336.81 billion) in 2024-25. The Compound Annual Growth Rate (CAGR) between 2015-16 and 2024-15 is 11.61 percent.
In 2023-24, the State’s per capita GSDP was estimated at Rs. 3,68,085, at current prices (US$4,413). The CAGR per capita for the period between 2015-16 and 2023-24 is 10.74 percent.
The tertiary sector contributed 66.72 percent followed by 20.24 percent by the secondary sector and 13.04 percent by primary sectors, to the State GSDP at current prices, in 2023-24.
FDI in Karnataka
Karnataka was one of the top FDI recipients (equity inflow) in India with a share of 22 percent of the total FDI received by India in Fiscal Year (FY) 24, according to the Department for Promotion of Industry and Internal Trade (DPIIT).
The state is also the second-highest FDI recipient after Maharashtra. Investment in Karnataka has witnessed a rise from Rs. 16,500 crore in 2018-19 to Rs. 3.23 lakh crore in 2022-23.
Reported upcoming investments in Karnataka
The State approved a unit of Taiwan’s Foxconn investment of Rs. 8,000 crore which will create around 50,000 jobs. Former Sri Lankan cricketer Muttiah Muralitharan is set to invest Rs. 1,400 crore to expand his soft drink business.
A new manufacturing unit is being developed in Chamarajanagar district and plans are afoot to invest more in Dharwad as well – this was reported on June 19, 2024.
The State Government signed investment deals worth Rs. 22,000 crore on 17 January 2024, with many global industries such as Microsoft, Web Werks, Hitachi, Lulu Group, Takeda Pharma, B L Agro, InoxAir Products, Honeywell, Nestle and Tillman Global at the World Economic Forum 2024.
The aim of this is to drive infrastructural development, technological advancement, and economic growth in the State.
Airport projects
Hassan Airport
With an estimated cost of Rs. 193.76 crore, the Karnataka Government is developing Hassan airport to operate ATR-72 flights. So far, the government has released a grant of 164.70 crore and expects to complete the development of Hassan Airport by 2024-25.
Mysuru airport
With administrative sanction for 240 acres of land, acquisition and a grant of Rs. 276.13 crore has been released so far, for expanding the Mysuru airport’s runway.
The development of Raichur airport at Rs. 219 crore is to be finished by 2025, with a grant of Rs. 18.71 crore released after the Budget 2023–24.
Vibrant sectors in Karnataka
The sectors of automotive, agricultural, aerospace, textile and garments, biotech, and heavy engineering are all thriving in Karnataka. For important businesses, including IT, biotechnology, engineering, food processing and aerospace, the state offers sector-specific Special Economic Zones (SEZs).
As of July 2022, there were 34 SEZs in operation, 61 SEZs with official approvals, and 50 SEZs that had been notified in Karnataka.
When it comes to the plantation of crops, Karnataka is the third largest producer of plantation crops in the country. In 2022–2023, the state’s total foodgrains production was estimated at 143.55 lakh tonnes.
In 2023-34, sugarcane was one of the key crops of the state with production of 583.10 lakh tonnes in 2023-24.
Policy initiatives
Under the Karnataka Industrial Policy 2020–25, the state provides a plethora of fiscal and policy incentives for firms, along with simplified investment procedures.
The Karnataka government also passed the “Karnataka Electric Vehicle and Energy Storage Policy 2017” in September 2017.
The state government amended the policy in June 2021 to provide greater support for the electric vehicle industry. A 15 percent subsidy on capital expenditure on land value was announced as per the legislation (fixed value assets up to a maximum limit of 50 acres of land).
In May 2022, the Karnataka government unveiled the new “Karnataka Renewable Energy Policy” for the timeframe of 2022 to 2027. The goal of the policy is to establish Karnataka as a top destination for renewable energy investments and to create a green energy-friendly, sustainable economy.
Third largest state GDP contributor to India – EAC-PM
According to the Economic Advisory Council (EAC) to the Prime Minister, Karnataka is positioned as the third-largest state in India’s GDP.
In 1960–61, Karnataka’s portion of India’s GDP was 5.4 percent; this percentage was relatively constant until 1990–91.
The state did, however, see substantial development following the policy change, with its GDP share increasing to 6.2 percent by 2000–01 and 8.2 percent by 2023–24.
This growth has positioned Karnataka with the third-largest share of India’s GDP.
(The author of this article is Madhusudhanan S, an Economist and former consultant with the Government of India in New Delhi. He has 16 years’ experience in Economics Policy and was associated with CMIE, Government of Tamil Nadu, Union Planning Commission, and Union Ministry of Finance)
