Finance Commission meets with representatives of Karnataka Trade and Industry

The state needs to provide enhanced impetus to the development of the manufacturing sector, which, in turn, would calibrate its overdependence on IT / ITeS sector, thereby, reducing concentration risk to growth.

The 15th Finance Commission headed by Chairman, Shri N.K. Singh along with its Members and senior officials met today with the representatives of the Trade and Industry in Karnataka.

The Commission observed that:

i) The growth rate of GSDP (constant prices, 2011-12 series) of Karnataka has fluctuated widely from 2012-13 to 2018-19, compared to GDP (constant prices, 2011-12 series) of India.

ii) Share of tertiary sector in GSVA (current prices) of Karnataka is highest amongst all southern states.

iii) Main drivers of the tertiary sector in the State are IT and ITeS. Karnataka is home to the 4th largest technology cluster in the world.

iv) Bengaluru is known as the start-up capital of India and it is reported that nearly 30% of the start-ups in the country are from Bengaluru (as per state's memorandum).

v) In the Ease of Doing Business Rankings, Karnataka was ranked 8th, amongst all states, in 2017.

vi) The manufacturing sector in the state majorly comprises automobile, aerospace, textile & garment, biotech, heavy engineering and agro-industries.

Further, as informed by the Pr. AG Karnataka, in 2018-19, there was GST revenue shortfall of Rs. 12,407.75 crore as compared to the protected revenue, which is more than 23% shortfall.

As per State's Memorandum to the 15th Finance Commission, the initiatives are undertaken by the State Government to promote Investment include:

Karnataka is the first State in the country to roll out multi-sector startup policy for 2015-2020 aiming towards a globally competitive startup ecosystem. The objective is to set-up 20,000 technology start-ups by 2020.

Karnataka Udyog Mitra (KUM) is a single contact point for all investors who are looking at setting up enterprises/business in the state. Its role is to facilitate investments to enable a smooth transition from the stage of receiving investment proposals to the eventual implementation of the project.

The 15th Finance Commission observed:

The state needs to provide enhanced impetus to the development of the manufacturing sector, which, in turn, would calibrate its overdependence on the IT / ITeS sector, thereby, reducing concentration risk to growth. In general, districts of north Karnataka are relatively backward compared to south Karnataka.

The Commission further noted all the concerns highlighted by the representatives of the Karnataka Trade and Industry and promised to address them in its recommendations to the Central Government.

(With Inputs from PIB)