Pandemic fallout: Karnataka’s GSDP estimated to shrink by 2.6%

For the first time in at least a decade, Karnataka’s gross state domestic product at constant prices is estimated to decrease by 2.6% (Rs 29,963 crore) to Rs 11.1 lakh crore for 2020-21 due largely to the pandemic, the Economic Survey (2020-21) shows.

Comparatively, GSDP had grown by 5% to Rs 11.4 lakh crore in 2019-20, although the growth rate was lower by about 1.5 percentage points compared to the previous year. The rate of growth has been consistently declining since 2017-18.

“The pandemic has caused an unprecedented human and health crisis and the measures necessary to contain the virus have triggered an economic downturn,” the survey states. “The effects of the lockdown have been severely felt because production, consumption, exchange and other interdependent economic activities have crippled industry.”

Sector-wise performances for 2020-21 show that while agriculture and allied sectors are pegged to grow at 6.4%, the industry sector has contracted -5.1% and the services sector by -3.1%.

“Losses of employment and income have severely impacted workers in informal sectors and poorer families,” the survey reads.

Karnataka is set to post a negative growth of 2.6%, while the survey estimates negative growth at the national level will be 7.7%. In fact, between 2012-13 to 2020-21, Karnataka’s growth rate was better than GDP in all but two years. While it was the same (6.5%) as the GDP in 2018-19, it was lower than GDP in 2014-15.

Still, at current prices, the survey estimates GSDP will grow by 2.2% to touch Rs 16.6 lakh crore this year from Rs 16.2 lakh crore the previous year. But this is compared to the earlier estimate which puts the size of GSDP for 2020-21 at more than Rs 18 lakh crore.

The government claims fiscal consolidation efforts and toning up of tax administration yielded “buoyant revenue”. Revenue receipts stood at nearly Rs 1.8 lakh crore (rounded off) in 2020-21, up by 1.5% compared to the previous year. Revenue expenditure jumped to Rs 1.8 lakh crore — nearly 1.6% growth.

Aggregate receipts (revenue and capital) is estimated to increase by about Rs 10,023 crore to touch Rs 2.3 lakh crore compared to Rs 2.2 lakh crore the previous year. Aggregate expenditure is also pegged at Rs 2.3 lakh (slightly more than the receipts), compared to Rs 2.2 lakh crore.

While non-tax revenue increased to Rs 7,767 crore from Rs 7,508 crore during the year, the share of state’s tax as a percentage of GSDP remained constant at 7.09% this year, compared to 7% in 2019-20.

Overall, the state’s own tax revenue increased to nearly Rs 1.7 lakh crore, growing at 4.5%. The value of exports for the first eight months of the fiscal stood at Rs 3.3 lakh crore compared to more than Rs 7 lakh crore for the whole of 2019-20.

No comments: