Economy of Karnataka

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Karnataka is one of the high economic growth states in India with GSDP (Gross State Domestic Product) growth of 9.2% in the year 2006-2007.[1][2] The total GSDP of Karnataka in 2006-2007 is about Rs. 1940.09 billion ($ 46.19 billion).[3] With an overall GDP growth of 56.2% and a per capita GDP growth of 43.9% in the last decade, Karnataka surpassed all other states in India, pushing Karnataka's per capita income in Indian Rupee terms to sixth place.[4] Until September 2006 Karnataka received a Foreign Direct Investment of Rs. 7809.7 crores ($ 1725.5 million) for fiscal year 2006-07 placing it at third spot among states in India.[5] At the end of 2004, the unemployment rate of Karnataka was 4.57% compared to a national rate of 5.99%.[6] For the fiscal year 2006-07 the inflation rate of Karnataka was 4.4% which was less than the national average.[7]

Contents

[edit] Sectors in the economy

A fiscal year in Karnataka begins on April 1 of the previous calendar year and ends on March 31 of the year with which it is numbered. The different entities that contribute to the economy are broadly classified into three sectors:[8]

The contribution of primary, secondary and tertiary sectors to Karnataka's GSDP in the year 2006-2007 has been 19.2%, 26.2% and 54.6% respectively.[3]

[edit] Agriculture

Haystack on stilts in paddy fields of Uttara Kannada district
Haystack on stilts in paddy fields of Uttara Kannada district

For many rural residents of Karnataka, agriculture is the major occupation. A total of 123,100 km² of land is cultivated in Karnataka constituting 64.6% of the total geographical area of the state.[9]. According to the 2001 census, farmers and agricultural labourers formed 56% of the workforce of Karnataka[10]. Agriculture in Karnataka is heavily dependent on the southwest monsoon since the extent of arid land in the state is second only to Rajasthan.[10] Only 26.5% of sown area (30,900 km²) is subjected to irrigation.[9] The state has three agricultural seasons – Kharif (April to September), Rabi (October to December) and Summer (January to March).[9] The main crops grown here are rice, ragi, jowar, maize, and pulses (Tur and gram) besides oilseeds and number of cash crops.[9] Cashews, coconut, arecanut, cardamom, chillies, cotton, sugarcane and tobacco are among the other crops produced in the state. Karnataka is the largest producer of coarse cereals[11], coffee[12] and raw silk[13] among the states in India. Horticultural crops are grown in an area of 16,300 km² and the annual production is about 9.58 million tons.[9] The income generated from horticulture constitutes over 40% of income generated from agriculture and its is about 17% of the state's GDP.[9] In floriculture, Karnataka occupies the second position in India in terms of production and 700 tons of flowers (worth Rs. 500 million) were produced in 2004-05.[9]

[edit] Industry

Karnataka evolved as the manufacturing hub for some of the largest public sector industries of India after independence. Hindustan Aeronautics Limited which is dedicated to research and development activities for indigenous fighter aircraft for the Indian Air Force employs over 9,500 employees making it one of the largest public sector employers in Karnataka.

Other heavy industries such as National Aerospace Laboratories, Bharat Heavy Electricals Limited, Indian Telephone Industries, Bharat Earth Movers Limited (BEML), Hindustan Machine Tools and Indian subsidiaries of Volvo and Toyota are also headquartered in Bangalore. India's national space agency Indian Space Research Organization (ISRO) is headquartered in Bangalore and employs approximately 20,000 people. TVS Motors has a motorcycle manufacturing plant at Mysore and Tata Motors at Dharwad. Karnataka state has many companies engaged in manufacturing of electrical equipment and machinery like Kirloskar, ABB, Kavika, Larsen and Toubro etc. This may be due to the location of the Central Power Research Institute (CPRI) at Bangalore.

[edit] Minerals

Gold, iron ore, quartz, limestone, manganese, kyanite and bauxite are some of the minerals that are found in Karnataka. [14]. After the closure of the Kolar Gold Fields mine in Karnataka, the only company in India that produces gold by mining and extracting it from the ore is Hutti Gold Mines Limited that has plants at Hutti and Chitradurga in Karnataka.[15]. Major mines of manganese and iron ore are located at Sandur in Bellary district.[16]. Visweswaraiah Iron and Steel Ltd. at Bhadravathi and Jindal Vijayanagar Steel Ltd. at Toranagal are engaged in the production of iron and steel. Indian Aluminium Company Ltd (Hindalco) has an aluminium plant near Belgaum.[17]. Mysore Minerals Limited is in the mining and production of chromite in Hassan district.[17] Rajashree Cements at Adityanagar, Vasavadatta Cements at Sedam and The Associated Cement Company Ltd. at Wadi are engaged in the production of cement.[17]

[edit] Information and biotechnology

For more details on this topic, see Software industry in Karnataka.
Infosys Headquarters in Bangalore. More than 50% of all software companies in India are located in Karnataka
Infosys Headquarters in Bangalore. More than 50% of all software companies in India are located in Karnataka

Karnataka is the leader in the information technology sector in India and its capital Bangalore is known as the Silicon Valley of India. In the IT sector, Karnataka generated a total revenue of Rs. 516.5 billion in the financial year 2006-07 which included Rs. 487 billion from software exports and Rs. 29.5 billion from hardware exports.[18]. A total of 1973 companies in Karnataka are involved in Information Technology-related business.[18] While the bulk of the IT related companies are located in Bangalore, some companies are located in Mysore, Mangalore and Hubli as well. Bangalore is also the headquarters of Wipro and Infosys which are among the top three IT companies in India with respect to market capitalization.[19].

As of June 2006, Karnataka housed 55% of biotechnology related companies in India.[20]. Bangalore is also the home of the largest biocluster in India with total revenues of Rs. 14 billion and having 158 of the 320 companies working on biotechnology in India.[20] Karnataka has a headcount of over 6800 scientists involved in biotech research and out of 28 biotech companies that were registered in India in the year 2005-06, 27 were located in Karnataka.[20]

[edit] Banking in Karnataka

For more details on this topic, see Banking in Karnataka.

Karnataka, particularly the coastal districts of Dakshina Kannada and Udupi kave a premier position in banking in India.[21] This is because seven of the country's leading banks, Canara Bank, Syndicate Bank, Corporation Bank, Vijaya Bank, Karnataka Bank, Vysya Bank and the State Bank of Mysore originated from this state.[21] The first five in the above list of banks were established in the districts of Udupi and Dakshina Kannada. These districts have among the best distributions of banks in India—a branch for every 500 persons.[22] Between 1880 and 1935, 22 banks were established in coastal Karnataka, nine of them in the city of Mangalore.

As of March 2002, Karnataka had 4767 branches of different banks servicing the people of the state.[23] The number of people served by each branch was 11,000 which is lesser than the national average of 16,000, thereby indicating better penetration of banking in the state.[23]

[edit] Infrastructure

[edit] Water supply

Usually water supply is provided by the local authorities like municipalities and panchayats. The first hydroelectric plant in the state was built at Sivasamudram Falls on the Kaveri River in 1902.[24]

[edit] Electrical supply

Karnataka Power Transmission Corporation Limited is the sole provider of electricity for the state. The Linganamakki reservoir will supply around 35 percent of power to the state. Karnataka electricity supply will be divided into BESCOM (Bangalore Electricity Supply Company), MESCOM (Mangalore Electricity Supply Company), GESCOM (Gulbarga Electricity Supply Company), HESCOM (Hubli Electricity Supply Company) and CESCOM (Chamundesvary Electricity Supply Company). A good number of windmills were present. The Raichur Thermal Power Station and Near Bellary (Kuduthini). Karnataka is also the location of companies like SELCO (India), which is promoting the usage of solar electricity among the rural folk of the state and is also twice winner of the Ashden awards.

[edit] Notes

  1. ^ GSDP registers 9.2 per cent growth. Online webpage of the Hindu, dated 2007-03-16. 2007, The Hindu. Retrieved on 2007-06-11.
  2. ^ Statement: Gross State Domestic Product at Current Prices. Online webpage of the Ministry of Statistics and Programme Implementation. Government of India. Retrieved on 2007-06-11.
  3. ^ a b Budget 2007-2008. Online webpage of the Finance Department. Government of Karnataka. Retrieved on 2007-06-11.
  4. ^ In terms of per capita GDP — Karnataka, Bengal fastest growing States. Online webpage of the Hindu, dated 2005-06-09. 2005, The Hindu. Retrieved on 2007-06-11.
  5. ^ Government of India. Foreign Direct Investment. Online webpage of Indian budget. Retrieved on 2007-06-11.
  6. ^ Government of India. Employment and Unemployment. Online webpage of Indian budget. Retrieved on 2007-06-19.
  7. ^ Budget 2006-2007. Online webpage of the Finance Department. Government of Karnataka. Retrieved on 2007-06-19.
  8. ^ B.B. Bhattacharya & S. Sakthivel. Economic reforms and jobless growth in India in the 1990s. Online webpage of the Institute of Economic growth. Retrieved on 2007-06-11.
  9. ^ a b c d e f g Karnataka Agricultural Policy 2006. Online webpage of Department of Agriculture. Government of Karnataka. Retrieved on 2007-06-04.
  10. ^ a b Karnataka Human Development Report 2005. Online webpage of the Planning Commission. Government of India. Retrieved on 2007-06-04.
  11. ^ Area, Production and Yield of Coarse Cereals during 2004-05 and 2005-06 in respect of major Coarse Cereals Producing States along with coverage under Irrigation. Online webpage of DACNET. Government of India. Retrieved on 2007-06-04.
  12. ^ Coffee data. Online webpage of Coffee Board of India. Retrieved on 2007-06-04.
  13. ^ Bamboo in Sericulture. Online webpage: TECA - Technology for Agriculture. FAO, United Nations. Retrieved on 2007-06-04.
  14. ^ List of Mining Leases in Karnataka. Online Webpage of the Department of the Mines and Geology. Govt. of Karnataka. Retrieved on 2007-06-05.
  15. ^ Amit Mitra. Global mining houses on `gold rush' to India. Online Webpage of the Hindu Business line 2004-09-26. 2004, The Hindu Business Line. Retrieved on 2007-06-05.
  16. ^ Madhumathi D.S.. Sandur Manganese set to clear dues. Online Webpage of the Hindu Business line 2004-04-10. 2004, The Hindu Business Line. Retrieved on 2007-06-05.
  17. ^ a b c Chin S Kuo. The Mineral Industry of India. Online Webpage of the U.S. Geological Survey. U.S. Geological Survey. Retrieved on 2007-06-05.
  18. ^ a b IT exports from Karnataka cross Rs 50k cr. Online Edition of The Financial Express, dated 2007-05-22. 2007: Indian Express Newspapers (Mumbai) Ltd.. Retrieved on 2007-06-05.
  19. ^ TCS topples Infosys as m-cap leader in IT space. Online Edition of The Economic Times, dated 2006-07-14. © 2007 Times Internet Limited.. Retrieved on 2007-06-05.
  20. ^ a b c Bangalore tops biocluster list with Rs 1,400-cr revenue. Online Edition of The Hindu Business Line, dated 2006-06-08. © 2006, The Hindu Business Line. Retrieved on 2007-06-05.
  21. ^ a b Ravi Sharma. Building on a strong base. Online Webpage of The Frontline, Volume 22 - Issue 21, Oct. 08 - 21, 2005. © 2005, Frontline. Retrieved on 2007-06-21.
  22. ^ Ravi Sharma. A pioneer's progress. Online Edition of the Frontline, Volume 20 - Issue 15, July 19 - August 01, 2003. © 2003, Frontline. Retrieved on 2007-06-21.
  23. ^ a b State/Union Territory-Wise Number of Branches of Scheduled Commercial Banks and Average Population Per Bank Branch – March 2002. Online webpage of the Reserve Bank of India. Retrieved on 2007-06-21.
  24. ^ Places of interest - Sivasamudram. www.mysore.net. Retrieved on 2006-11-09.