The Karnataka government on October 21 dismissed a report that projected a GSDP growth rate of 9.4 percent for the state in 2024-25 from 13.1 percent a year back.
In FY25, the report projected a state GDP (GSDP) growth rate of 9.4 percent for Karnataka, compared to a national average of 10.5 percent. The analysis was based on the budgets of 21 states, which account for 95 percent of India's gross domestic product (GDP).
"Karnataka is a key driver of India’s economic progress, consistently outperforming the national average GSDP growth despite challenges. The claim that its GSDP growth has slowed and fallen behind the national average is inaccurate. The state government’s proactive and pro-growth policies continue to fuel strong economic growth," a statement from the Chief Minister's Office (CMO) said.
The CMO noted that the report initially projected a modest 4 percent GSDP growth for Karnataka in 2023-24, which was revised to 13.1 percent by the end of the year. This significant discrepancy indicates an error in early measurement and an underestimation of the state’s economic performance.
"Karnataka’s GSDP growth in 2023-24 stood at 10.2 percent (Ministry of Statistics and Programme Implementation), far exceeding the national average growth rate of 8.2 percent. This achievement is particularly significant, given the challenges the state faced," the statement added.
IT slowdown and drought
The CMO acknowledged that the IT slowdown and drought have contributed to the current economic conditions.
"Karnataka endured the worst drought in a decade, which severely impacted agricultural output, leading to negative growth in that sector. Additionally, as a state heavily reliant on the IT and hardware sectors, which contribute 28 percent of its Gross State Value Added (GSVA), Karnataka was further affected by a global economic slowdown,” it said.
According to tech body Nasscom, the Indian IT industry’s revenue growth fell from 15.5 percent in FY22 to 8 percent in FY23, reflecting global recessionary fears and inflationary pressures. The International Monetary Fund (IMF) projected a sharp drop in global growth from 6 percent in FY21 to just 2.7 percent in FY23.
Also, read: Karnataka plans Bidar-Bengaluru economic corridor; feasibility study soon
“Despite these external and domestic challenges, Karnataka's economy demonstrated remarkable resilience, achieving 10.2 percent growth—a clear reflection of the state's robust economic foundations," the CMO stated.
“The Union Ministry of Finance has projected a more realistic 14 percent GSDP growth rate for Karnataka. Strong economic indicators, such as a 10 percent year-on-year growth in GST collections and a 24 percent year-on-year growth in stamp duty revenue as of September 2024, reinforce the view that Karnataka’s economy is growing at a healthy pace,” it said.
"Karnataka’s GSDP per capita remains among the highest in the country, on par with Telangana. Both Congress-led states are demonstrating strong economic performances. Karnataka’s pro-people policies, such as the Guarantees, are ensuring that the benefits of development reach every citizen, fostering inclusive and equitable growth,” it said.
"Thus, far from being a case of economic mismanagement, Karnataka is outperforming the national economy, driven by strategic investments, innovative policies, and a business-friendly environment. The state continues to be a leading engine of India’s economy," the CMO added.
Also, read: Karnataka: A fast-growing economy, but poorer northern districts cause of concern
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