Karnataka, often lauded for its thriving tech hub, Bengaluru, faces significant hurdles on its path to achieving a $1-trillion economy by 2032. A recent 374-page report, jointly released by the state government and the Federation of Indian Chambers of Commerce & Industry (FICCI), highlights the state’s shrinking farmlands and the notorious traffic congestion in Bengaluru as major impediments to realizing its ambitious trillion-dollar aspirations.
Charting the Course for Karnataka’s Trillion-Dollar Ambitions
The comprehensive report, unveiled on Thursday, outlines a roadmap for Karnataka to reach the coveted $1-trillion club. To attain this milestone, the state will require investments totaling Rs 152.87 lakh crore over the next decade, with Rs 22.93 lakh crore from the government and a staggering Rs 107.01 lakh crore from the private sector.
However, this ambitious endeavor is no walk in the park, as numerous challenges span various sectors and must be surmounted to materialize this vision.
Agriculture at a Crossroads
One sector of concern is agriculture, a significant contributor, accounting for 15% of the Gross State Domestic Product (GSDP). The report underscores the issue of fragmented land holdings, a substantial challenge in the sector.
Karnataka currently boasts 86.81 lakh farm holdings within an expanse of 118.05 lakh hectares, with an average holding size of 1.36 hectares. The report points out that most farmers struggle to harness economies of scale due to their relatively small land holdings. Over time, these land parcels become economically unviable, compounding the problem.
The report highlights that marginal and small holdings make up 80% of the total, operating on 44% of the operational land area. In contrast, semi-medium, medium, and large holdings account for just 20% of the total but operate on 56% of the entire operational area. This trend underscores the mounting pressure on rapidly diminishing land holdings.
Other Challenges on the Horizon
The report identifies several other pressing challenges, including inadequate urban mobility, redundancy in state departments, low enrollment in education, insufficient rural transport services and infrastructure, and the concentration of public services and employment opportunities in Bengaluru.
Traffic congestion in Bengaluru emerges as a significant concern that could deter potential investors. The report suggests imposing a congestion charge on the approximately 12 million vehicles entering the city daily through nine entry points.
Furthermore, the ease and cost of doing business face “numerous constraints” in Karnataka. The report highlights a 200% increase in property taxes charged by the state for industrial establishments as a concern for businesses.
Additionally, the report recommends boosting formal employment by providing incentives to employers in ten underprivileged districts, with payments ranging from Rs 2,000 to Rs 3,000 for each job created.
Karnataka’s journey toward a $1-trillion economy is paved with challenges that require strategic interventions across sectors. Overcoming land fragmentation and addressing traffic congestion in Bengaluru are key steps on this ambitious path.
