Karnataka economix

B S Yeddyurappa’s had a bad year politically, but in terms of the state’s economics, this has been his best so far. And he probably needs to thank the global economic recovery for much of that. The Economic Survey released by the state government on the eve of its annual budget, says the gross state domestic product (GSDP), or total value of all production and services in the state (after discounting for inflation), has risen by about 8.2% in 2010-11. That’s up from 5.2% and 3.7% in the previous two years. Much of that increase is on account of a sharp rise in growth in the services sector, which is up at 9.7% this year, from 3.7% last year. The services sector accounts for 55% of the state’s GSDP. The sector’s growth would have been aided by the IT industry’s smart recovery from the global recession. Other important segments, like trade, hotels and restaurants, real estate, ownership of dwellings and business services also rose significantly. Agricultural growth was also the highest in the past three years, at 5.9%. It was 4.3% last year and 0.5% the year before. The Survey says rainfall was good this year, and this probably would account for much of the increase in agricultural growth. Industry’s performance is, however, disappointing. The growth this year is down to 6.9%, from 8.5% last year. Maybe Yeddyurappa recognizes the problem in the sector, which is probably why the Global Investors’ Meet (GIM) was organized last year, and why he wants one again next year. If the government is able to move forward quickly on the manufacturing investments promised at the GIM, Yeddyurappa may be able to end his term with a robust industrial sector. As of now, the feeling is that states like Gujarat are able to do a much better job of attracting investments in manufacturing. It must also be noted that while this year was better than last year, GSDP growth rates remain much lower than what they were in the years preceding recession. Many say poor infrastructure, shortage of power and its high cost, is Karnataka’s biggest issue. There is little in the survey about any new thinking about the problem.