Karnataka’s economy recorded a compounded annual growth rate (CAGR) of 8 per cent during the Eleventh Five-Year Plan period (EFP).
According to pre-budget economic survey for 2011-12 released here on Tuesday, in the case of agriculture, Karnataka achieved substantial growth during the Plan period. The annual average growth rate of agriculture and allied activities is expected to be 5.7 per cent as against the target of 5.4 per cent set by the Planning Commission although the growth rate for 2011-12 is expected to decrease 2.9 per cent due to the adverse weather conditions.
This growth rate is higher than that achieved during the Tenth Five Year Plan. The growth rate at the all-India level is 3.3 per cent during the EFP as against the target of 4.1 per cent. The growth rate of the State during 2007-08 and 2010-11 reached 12.4 per cent and 13.3 per cent respectively, the survey added. In case of industry, the growth rate during 2007-08 over the previous year was 10.8 per cent and it declined 5.1 per cent and 0.7 per cent during 2008-09 and 2009-10 respectively due to a global slowdown. There was a spectacular recovery in the growth rate which reached 6.1 per cent during 2010-11. However, the growth rate is anticipated to decline to 3.6 per cent during 2011-12.
“The decline in manufacturing growth rate can be attributed to a slowdown in the global economy considering Karnataka’s high degree of openness to export trade (about 43 per cent during 2008-09 to 2010-11). The industrial sector’s annual average growth rate during the EFP is expected to be 5.3 per cent as against the target of 12.5 per cent set by the Planning Commission. This rate is 6.7 per cent at the all-India level as against the target of 10.5 per cent,” the economic survey said.In the case of the services sector, the state achieved a substantial growth rate of 13.8 per cent during 2007-08 over the previous year.
But the same declined during three subsequent years and stood around 9 per cent. During 2011-12, the growth rate is expected to reach 10.6 per cent. The annual average growth rate of the service sector was recorded at 10.3 per cent during the EFP as against the target of 12 per cent set by the Planning Commission. All subsectors within the services sector have shown a positive growth during the Eleventh Plan period.
The state has maintained revenue surplus throughout the EFP period although the revenue surplus declined from the high of 1.4 per cent of GSDP during 2007-08 to around 0.3 per cent in 2011-12.
The global economic meltdown has had a considerable negative impact on the state’s tax revenues during 2007-08 and 2008-09, bringing down the share of revenue receipts in GSDP to 14.07 per cent and 14.26 per cent respectively. However, the state’s revenue resources are showing signs of recovery from 2010-11 and are expected to increase to 15.27 per cent in 2011-12. Karnataka’s fiscal deficit (as a percentage of GSDP) has reduced to 2.87 per cent in 2011-12 as compared to 3.23 per cent in 2008-09.
On the expenditure front, capital outlay as a per cent of GSDP has increased from 2.81 per cent in 2004-05 to reach its peak level of 3.76 per cent in 2006-07.