Economy

Big, bold moves put Karnataka’s economy back on growth path- The New Indian Express

Read more at www.newindianexpress.com

Express News Service

BENGALURU: “There will be no lockdown in Bengaluru or anywhere in the state from now on. People need to get back to their lives. The state has to consider reviving the economy too,” Chief Minister B S Yediyurappa had said in July 2020 amid the Covid-19 pandemic.

The decision came at a time many states were still extending the lockdown and imposing curfews in an attempt to curtail the spread of coronavirus. It was perhaps this risky and bold, but much-needed decision that has put Karnataka’s economy on the road to recovery.

Six months down the line, with subsidies, incentives, facilitation, heavy borrowings, fund rationalisation, labour and land law amendments, along with a whole lot of cost-cutting measures, Karnataka’s economy is steadily picking up pace.

Whether in terms of revenue receipts or sector-wise growth, Karnataka is doing better month after month while, at the same time, managing to keep the number of Covid-19 cases in check. Though the state may still fall short of achieving revenue and growth targets due to the impact of the pandemic, its recovery has been better than anticipated, according to the State Finance department. On Friday, Union Minister for Chemical and Fertilisers D V Sadananda Gowda said the Central Government had given its in-principal approval for setting up a Plastic Park in Mangaluru.  

Panel cleared projects worth Rs 26K-cr in single sitting

Earlier this month, Chief Minister B S Yediyurappa laid the foundation stone for the much-hyped Koppal toy cluster. The project has already received investment proposals worth Rs 1,540 crore from six firms. Prior to that, the Union Government approved funding of Rs 1,702 crore for Karnataka to develop the Tumakuru node as the next big industrial hub.

Once operational, the project is estimated to create a phenomenal 88,500 jobs. These are just some of the bigticket projects that Karnataka is armed with to give its economy a boost apart from two key national highway projects at a cost of Rs 323 crore. With a new industrial policy in hand, the State High-Level Clearance Committee (SHLCC), in a single sitting in December, cleared five projects with a total investment potential of Rs 26,659 crore and can generate employment for 13,341 people.

This despite the state witnessing labour tensions at the Toyota Kirloskar Motor plant in Bidadi and iPhone maker Wistron near Kolar which threatened to hamper Karnataka’s investment prospects. On the rural front, the agriculture sector has performed better than the last fiscal year owing to good rains. For those who went back to villages in reverse migration as a fallout of the Covid-19 lockdown, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) ensured jobs. “By mid-January, we had already achieved 12 crore person days as against our annual target of 13 crore PDs.

The demand was so high that we had to ask the Union Government to revise our target by another 1.1 crore PDs,” said L K Atheeq, Principal Secretary, Rural Development and Panchayat Raj, who added that the scheme acted as a safety net for wokers. With work from home kicking in as early as March last year, the Information Technology (IT) sector suffered minimal damage due to the pandemic. “The IT sector rose to the challenge, and the facilitation and concessions given by the government helped. We ensured utilities were maintained and output was not affected.

We were the first to remove restrictions for all sectors and allowed the gradual opening of the manufacturing sector too. Our timely policy decisions, without waiting for anyone, helped,” said Deputy Chief Minister Dr C N Ashwathnarayana, pointing to the government’s role in the state’s economic recovery. Economic activity is bustling within the state with new airports under construction and more domestic flights connecting Tier-I and Tier-II cities . The bigger aviation growth story belongs to air cargo with many airlines boosting their cargo fleet by using their passenger flights also to transport goods. In December 2020, the Kempegowda International Airport recorded its highest ever cargo tonnage, at 33,053 tonnes since its inception.

It is, however, not all hunky-dory. With heavy borrowings, the state’s liabilities have drastically increased. Despite cost-cutting measures, the expenditure has remained unchanged with resources being diverted towards Covid-19 management including the cost of subsidies, incentives and compensations paid as part of the economic assistance package. Revenue receipts are lower when compared to the corresponding period last year. As per the Finance Department’s website, Karnataka’s total receipts till November 2020 stood at just Rs 90,976 crore as against the budget estimate of Rs 1,80,216 crore for the 2020-2021 fiscal — just about 50.48%.

“Month after month, receipts are improving. Excise is almost on target owing to increased tax slabs. Commercial taxes too are picking up. Motor vehicles taxes and Stamps and Registration are lagging, but the overall picture is better than what was anticipated in March,” said a senior official from the Finance Department. To make up for the loss in revenue, the government has resorted to fund rationalisation by reassigning allocations from schemes and programmes that can be delayed to those that need to be implemented immediately.

While the Union Government has rolled back the hike in dearness allowance, the Karnataka Government has cancelled encashment of leave for its employees among other measures to cut costs. Officials in the Finance Department suggest that electricity tariff subsidies, tax rebates, extended repayment windows announced by the state were a gamechanger for the manufacturing sector.

While entertainment, hospitality and tourism sectros are still lagging, Karnataka is confident that its citizens have not lost their purchasing power. “When you open up manufacturing and industries, you set the cycle of the economy in motion. There is production, there are jobs, there is payment/money and then there is consumption,” Dr Ashwathnarayana reasoned.

Big-ticket projects

Rs 1,702 cr for Vasantha Narasapura industrial  hub expected to create 88,500 jobs in 5 years

Koppal toy cluster with an investment commitment of  D1,540 crore expected to create 40,000- one lakh jobs in five years

Rs 323 cr for elevated corridor at Rani Chennamma Circle in Hubballi city and construction of four-lane road and minor bridge near Dastikoppa, Kalaghatgi taluk, on NH 63 under national highways projects 

(With inputs from S Lalitha, Pramod Kumar Vaidya, Arpita I and Mahesh Goudar)

Read more at www.newindianexpress.com

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