Karnataka Economic Survey 2023-24 PDF

1 CHAPTER State Income, Prices & Inflation 1.1 INTRODUCTION Karnataka is a state of diverse cultures and languages and the economic and social scenario within the State, in many ways, mirrors the scenario prevalent in the co...

1 CHAPTER State Income, Prices & Inflation 1.1 INTRODUCTION Karnataka is a state of diverse cultures and languages and the economic and social scenario within the State, in many ways, mirrors the scenario prevalent in the country itself. Located in the southern part of India, along its northern borders lie the states of Maharashtra and Goa; Andhra Pradesh and Telangana to the east; Tamil Nadu and Kerala to the south, while the Arabian Sea forms the western boundary. Karnataka has an area of 1,91,791 sq. kms. which constitutes 5.83% of the total geographical area and population of 6,10,95,297 accounts for 5.05% of country’s population in 2011. Karnataka, in terms of population, is the ninth largest state among India’s 28 major states and 8 union territories. The state is urbanised steadily. In terms of urbanization, the state has witnessed an increase of 4.68% in the proportion of urban population in the last decade. 61.33% are rural residents and 38.67% are urban residents. It has a larger proportion of its population living in urban areas, than the average for the country as a whole. This chapter analyses Karnataka’s economic growth in terms of changes in Aggregate and Per Capita State Income including stability of prices in the indices of wholesale as well as retail prices in the entire state. In addition, this chapter also provides an analysis of District Income Estimates along with related Inter-District Variations. 1.2 GROSS STATE DOMESTIC PRODUCT Gross State Domestic Product (GSDP) is the most important indicator in measuring economic growth of the State. It gives an overall picture of the state of the economy. This would enable the policy makers, administrators and planners for proper formulation and appraisal of plans for balanced economic development. Analysis of this indicator at aggregate and disaggregated levels leads to the insights of patterns and sources of growth. The State Domestic Product is defined as the “aggregate of the economic value of all goods and services produced within the geographical boundaries of the State, counted without duplication, for a specified period of time” by convention: a financial year. 1.3 GROSS STATE DOMESTIC PRODUCT - OVER-VIEW FOR 2023-24 Karnataka has released the GSDP Advance Estimates for the year 2023-24. In accordance to the estimates, the GSDP is estimated to be Rs.25,00,733 crore and is anticipated to grow at 10.2% at current prices. At constant (2011-12) prices, GSDP is Rs.14,23,229 crore with an expected growth of 6.6%. 1.4 COMPARISON OF GROSS STATE DOMESTIC PRODUCT AND GROSS DOMESTIC PRODUCT In 2023-24, the GSDP of Karnataka is anticipated to grow at 6.6% whereas the GDP at national level is 7.3% at constant (2011-12) prices. At current prices, the GSDP is anticipated to reach Rs.25,00,733 crore with a growth of 10.2% and GDP is likely to attain a level of Rs.2,96,57,746 crore with a growth rate of 8.9%. The share of Karnataka’s GSDP in All India GDP is 8.4% during 2023-24. The GSDP and GDP at current and constant (2011-12) prices from 2011-12 to 2023-24 are presented in Table 1.1 & 1.2. It can be clearly seen that except for 2017-18 and 2022-23 Karnataka’s growth rate at current prices has always been higher than all India growth rate. While at constant prices, State’s growth rate is higher than all India except for 2014-15, 2018-19 and 2023-24.  28 State Income, Prices & Inflation Table 1.1: Annual Growth of GSDP and GDP at Current Prices GSDP Growth Rate of GDP Growth Rate of Difference in Year (Rs. Crore) GSDP (%) (Rs. Crore) GDP (%) Growth Rates 2011-12 6,06,010 - 87,36,329 - - 2012-13 6,95,413 14.8 99,44,013 13.8 0.9 2013-14 8,16,666 17.4 1,12,33,522 13.0 4.5 2014-15 9,13,923 11.9 1,24,67,959 11.0 0.9 2015-16 10,45,168 14.4 1,37,71,875 10.5 3.9 2016-17 12,07,608 15.5 1,53,91,668 11.8 3.8 2017-18 13,33,240 10.4 1,70,90,042 11.0 -0.6 2018-19 14,79,391 11.0 1,88,99,668 10.6 0.4 2019-20 16,15,827 9.2 2,01,03,593 6.4 2.9 2020-21 16,41,460 1.6 1,98,29,927 -1.4 2.9 2021-22 19,78,094 20.5 2,34,71,012 18.4 2.1 2022-23 22,69,995 14.8 2,72,40,712 16.1 -1.3 2023-24 25,00,733 10.2 2,96,57,746 8.9 1.3 Source: 1. Directorate of Economics and Statistics, Government of Karnataka. 2. National Statistical Office, Government of India. * As per First Advance Estimates Table 1.2: Annual Growth of GSDP and GDP at Constant (2011-12) Prices GSDP Growth Rate of GDP Growth Rate of Difference in Year (Rs. crore) GSDP (%) (Rs. crore) GDP (%) Growth Rates 2011-12 6,06,010 - 87,36,329 - - 2012-13 6,43,033 6.1 92,13,017 5.5 0.7 2013-14 7,04,466 9.6 98,01,370 6.4 3.2 2014-15 7,48,429 6.2 1,05,27,674 7.4 -1.2 2015-16 8,31,322 11.1 1,13,69,494 8.0 3.1 2016-17 9,41,774 13.3 1,23,08,193 8.3 5.0 2017-18 10,19,724 8.3 1,31,44,583 6.8 1.5 2018-19 10,85,101 6.4 1,39,92,915 6.5 -0.1 2019-20 11,51,393 6.1 1,45,34,641 3.9 2.2 2020-21 11,24,942 -2.3 1,36,87,118 -5.8 3.5 2021-22 12,35,377 9.8 1,49,25,840 9.1 0.8 2022-23 13,35,052 8.1 1,60,06,425 7.2 0.8 2023-24 14,23,229 6.6 1,71,78,641 7.3 -0.7 Source: 1. Directorate of Economics and Statistics, Government of Karnataka. 2. National Statistical Office, Government of India. * As per First Advance Estimates Karnataka Economic Survey 2023-24  State Income, Prices & Inflation 29 1.5 COMPARISON BETWEEN ADVANCE ESTIMATES OF 2023-24 AND FIRST REVISED ESTIMATES OF 2022-23 The Gross State Domestic Product of Karnataka at constant (2011-12) prices for the year 2023-24 is anticipated to grow by 6.6%. The GSVA growth rate of agriculture sector has been estimated to be -1.8% in 2023-24 as against the growth of 2.8% in 2022-23 due to severe drought conditions and inadequate rainfall in the state which has affected in an area of 48 lakh hectares. The industry sector (comprising mining & quarrying, manufacturing, construction and electricity, gas & water supply) is expected to grow by 7.5% in 2023-24 against a growth of 3.8% during 2022-23 showing the gradual recovery from Covid distress. Construction with 8.2% growth rate and 7.4% in manufacturing are boosting the industrial sector growth rate. Service sector is expected to grow by 8.7% during 2023-24 compared to growth of 9.9% during 2022-23 due to growth in IT related services from 9.2% in 2022-23 to 12.6% in 2023-24. Public Administration with 10.5% growth rate, 8.2% in Other Services, 6.5% in Hotels and Restaurants are major contributing subsectors of services. Whereas, the First Advance Estimates of All India Gross Domestic Product (GDP) at constant (2011-12) prices for the year 2023-24 is expected to grow at 7.3%. The sectoral growth rate of Agriculture, Industry and Services at all India level is anticipated to grow at 1.8%, 7.9% and 7.7% respectively. The comparative table of sectoral growth rates of GSDP for 2022-23 and 2023-24 are presented in Table 1.3. Table 1.3: Sectoral Growth Rates of GSDP at Constant (2011-12) Prices Sl. No Sector 2022-23 F.R.E. 2023-24 A.E. 1 Crops -1.7 -5.6 2 Livestock 10.9 5.4 3 Forestry and Logging 1.9 1.5 4 Fishing 17.6 -4.6 Agriculture and Allied Sector 2.8 -1.8 5 Mining and Quarrying 9.0 9.7 6 Manufacturing 2.1 7.4 7 Electricity,Gas,Watersupply & Remediation Services 4.4 4.7 8 Construction 7.6 8.2 Industry Sector 3.8 7.5 9 Trade & Repair Services 7.2 3.2 10 Hotels and Restaurants 9.1 6.5 11 Railways 14.0 6.3 12 Road transport 4.5 5.3 13 Water transport 5.5 7.7 14 Air transport 16.2 4.2 15 Services incidental to transport 8.4 4.2 16 Storage 17.8 1.6 17 Communication 15.6 6.4 Karnataka Economic Survey 2023-24  30 State Income, Prices & Inflation Sl. No Sector 2022-23 F.R.E. 2023-24 A.E. 18 Financial Services 14.4 8.9 19 Real Estate, Professional Services & Ownership of Dwellings 10.5 10.5 a) Computer related Services 9.2 12.6 b) Real Estate & Other Professional Services 15.6 5.6 c) Ownership of Dwellings 13.2 3.8 20 Public Administration 14.9 10.5 21 Other services 7.5 8.2 Services Sector 9.9 8.7 Total GSVA at Basic Prices 7.6 7.2 Product Tax 6.4 9.3 Product Subsidies -24.1 68.3 Total GSDP at Market Prices 8.1 6.6 A.E.: Advance Estimates, F.R.E.: First Revised Estimates Source: Directorate of Economics and Statistics, Government of Karnataka 1.6 NET STATE DOMESTIC PRODUCT The estimates of Net State Domestic Product (NSDP) are derived from the Gross State Domestic Product (GSDP) by deducting Consumption of Fixed Capital (CFC) or Depreciation. For the year 2023-24, at current prices, NSVA growth of agriculture & allied activities, industry and service sectors are expected at 5.6%, 7.0% and 12.8% respectively which has lead the NSDP to Rs.22,61,867 crore, displaying a growth of 10.0% against 14.8% in 2022-23. Similarly, at constant (2011-12) prices the NSDP is estimated at Rs.12,63,925 crore showing a growth of 6.4% (Table 1.4). The NSVA growths of Agriculture & allied activities, Industry and Service sectors are expected to be -1.8%, 7.6% and 8.6% respectively. Table 1.4: NSDP at Current and Constant (2011-12) Prices NSDP at Current Prices NSDP at Constant (2011-12) Prices Sectors 2022-23 F.R.E. 2023-24 A.E. 2022-23 F.R.E. 2023-24 A.E. Agriculture 2,68,864 2,83,913 1,19,655 1,17,487 Industry 3,81,192 4,07,740 2,56,904 2,76,320 Services 12,11,909 13,66,777 6,64,832 7,21,869 NSVA at Basic Price 18,61,965 20,58,430 10,41,391 11,15,676 Product Tax 2,27,936 2,62,900 1,65,773 1,81,252 Product Subsidies 34,243 59,464 19,607 33,002 NSDP at Market Price 20,55,658 22,61,867 11,87,557 12,63,925 A.E.: Advance Estimates, F.R.E.: First Revised Estimates Source: Directorate of Economics and Statistics, Government of Karnataka Karnataka Economic Survey 2023-24  State Income, Prices & Inflation 31 Figure 1.1 shows the GSDP, NSDP and CFC at current prices from 2014-15 to 2023-24. The difference in GSDP and NSDP indicates the extent of consumption of fixed capital or depreciation. Figure 1.1: GSDP, NSDP and CFC at current prices 1.7. SECTORAL COMPOSITION OF GROSS STATE DOMESTIC PRODUCT The contributions of Agriculture and Industry sectors to the overall GSDP saw a marginal decrease from 13.66% to 13.04% and 20.92% to 20.24% in 2023-24 against 2022-23 respectively. The services sector, a largest component of GSDP saw a marginal increase from 65.41% in 2022-23 to 66.72% in 2023-24. The contribution of ‘Real estate, Professional Services & Ownership of Dwellings’ is highest with (38.32%) in 2023- 24 followed by Computer related services and R&D (28.16%)’, ‘Manufacturing’(12.47%), ‘Trade and Repair Services (8.61%) and ‘Crops (8.2%)’. The sectoral composition of GSDP in 2022-23 and 2023-24 at current prices is given in Table 1.5. The sectoral composition of GSDP is shown in Figure 1.2 for primary, secondary and tertiary sectors. Sector wise Gross and Net State Domestic Product estimates from 2018-19 to 2023-24 has been presented in Appendix 1.1 to 1.4. Table 1.5: Sectoral shares of GSDP at Current Prices (Percent) Sl. No Sector 2022-23 F.R.E. 2023-24 A.E. 1 Crops 8.54 8.20 2 Livestock 3.78 3.65 3 Forestry and Logging 0.78 0.72 4 Fishing 0.57 0.48 Agriculture and Allied Sector 13.66 13.04 5 Mining and Quarrying 0.65 0.66 6 Manufacturing 13.06 12.47 7 Electricity, Gas, Water supply & Remediation Services 1.47 1.50 8 Construction 5.74 5.61 Industry Sector 20.92 20.24 9 Trade & Repair Services 8.84 8.61 Karnataka Economic Survey 2023-24  32 State Income, Prices & Inflation Sl. No Sector 2022-23 F.R.E. 2023-24 A.E. 10 Hotels and Restaurants 1.02 1.03 11 Railways 0.27 0.26 12 Road Transport 3.79 3.66 13 Water Transport 0.03 0.03 14 Air Transport 0.07 0.06 15 Services Incidental to Transport 0.06 0.06 16 Storage 0.11 0.10 17 Communication 1.34 1.33 18 Financial Services 4.71 4.68 19 Real estate, Ownership of Dwellings & Professional Services 36.89 38.32 a) Computer related Services 26.53 28.16 b) Real Estate & Other Professional Services 4.82 4.78 c) Ownership of Dwellings 5.52 5.38 20 Public Administration 2.55 2.68 21 Other services 5.72 5.88 Services Sector 65.41 66.72 Total GSVA at Basic Prices 100.00 100.00 A.E.: Advance Estimates, F.R.E.: First Revised Estimates Source: Directorate of Economics and Statistics, Government of Karnataka Figure 1.2: Sectoral composition of GSVA at Current Prices 1.8 PER CAPITA INCOME Per capita income is estimated by dividing NSDP at current prices with mid-financial year projected population (as on 1st October). Per Capita Income (i.e. per capita NSDP) of Karnataka at current prices is estimated to be Rs.3,32,926 showing a rise of 9.3% during 2023-24, as against Rs.3,04,474 in 2022-23. Karnataka’s per capita income (Rs.3,32,926 ) is higher than All India per capita income (Rs.1,85,854) by 79%. Figure 1.3 provides comparison of per capita income of Karnataka and All India from 2014-15 to 2023-24. It is significant to note Karnataka Economic Survey 2023-24  State Income, Prices & Inflation 33 that the percapita income has shown a steep increase after 2020-21, indicating gradual recovery of state’s economy after the economic downturn due to covid pandemic. Figure 1.3: Comparison of Per Capita Income On comparison, the level of per capita income at constant (2011-12) prices was Rs.1,75,895 in 2022-23 and is expected to be Rs.1,86,038 in the year 2023-24 with a growth rate of 5.8%. 1.9 GROWTH OF NSDP AND PER CAPITA INCOME Table 1.6 presents the growth of Net State Domestic Product and Per Capita Income of the state over the years. CAGR shows incremental growth over time. Details of State Domestic Product estimates from 1960-61 to 2023-24 have been presented in Appendix 1.5. Table 1.6: Growth of NSDP at Market Price and Per Capita Income Year NSDP at Current Prices (Rs.Crore) CAGR (%) Per Capita Income (Rs.) CAGR (%) 1960-61 692 - 296 - 1970-71 1,858 10.4 641 8.0 1980-81 5,587 11.6 1,520 9.0 1990-91 20,551 13.9 4,598 11.7 2000-01 96,348 16.7 18,344 14.8 2010-11 3,68,338 14.4 62,251 13.0 2021-22 (S.R.E.) 17,90,456 21.2 2,66,866 20.3 2022-23 (F.R.E.) 20,55,658 14.8 3,04,474 14.1 2023-24 (A.E.) 22,61,867 10.0 3,32,926 9.3 A.E.: Advance Estimates, F.R.E.: First Revised Estimates, S.R.E.: Second Revised Estimates Source: Directorate of Economics and Statistics, Government of Karnataka Karnataka Economic Survey 2023-24  34 State Income, Prices & Inflation 1.10 INTER STATE COMPARISON The comparison of GSDP or State Income and per capita income of Karnataka for 2022-23 with selected States (for which data is available in CSO website) alongside All India is presented in Table 1.7. Karnataka ranks 3rd with regard to percapita income among selected States. Among neighbouring States, Only Telangana is above Karnataka by 2.6%. Table 1.7: Comparison of State Income and Per Capita Income for the year 2022-23 State State Income (Rs Crore) Per capita Income (Rs) Ranking in Per Capita Income Delhi 10,43,759 4,44,768 1 Telangana 13,13,391 3,12,398 2 Karnataka 22,69,995 3,04,474 3 Haryana 9,94,154 2,96,685 4 Tamil Nadu 23,64,514 2,75,583 5 Uttarakhand 3,02,621 2,33,565 6 Himachal Pradesh 1,95,405 2,22,227 7 Andhra Pradesh 13,17,728 2,19,518 8 Punjab 6,73,107 1,81,716 9 Rajasthan 14,13,620 1,56,149 10 Odisha 7,74,869 1,49,902 11 Madhya Pradesh 13,22,821 1,40,583 12 Jammu & Kashmir-U.T. 2,27,927 1,36,771 13 Jharkand 3,93,722 91,874 14 Uttar Pradesh 22,57,575 83,565 15 Bihar 7,51,396 54,111 16 All India 2,72,40,712 1,72,276 Source: 1. Karnataka: Directorate of Economics and Statistics, Government of Karnataka. 2. Rest of the States and all India: Central Statistical Office, Government of India. 1.11 DISTRICT INCOME The District Domestic Product estimates are prepared on a provisional basis. The database for the estimation is available for Primary sector only. In respect of Secondary and Tertiary sectors, the State level estimates are allocated to districts with appropriate available indicators and workforce under each sector as revealed during 6th Economic Census. The Directorate of Economics and Statistics publishes important publications namely “Karnataka at a Glance” and “District at a Glance” every year. These publications provides approximately 2000 indicators of data, both static information (Population Census, Agricultural Census and Livestock Census) and dynamic information related to the programmes of various development departments in addition to socio- economic and geographical information of the districts / taluks. These publications provides district wise / taluk wise data needed for computation of District Domestic Product Estimates. These publications also provides maps of taluks and districts. The estimates of Gross District Domestic Product and Percapita income for 2022-23 have been presented in Appendix 1.6. District wise sectoral contribution for all the 31 districts are presented in Table 1.8 Karnataka Economic Survey 2023-24  State Income, Prices & Inflation 35 Table 1.8 Sector wise contributions to Gross District Domestic Product Year : 2022-23 (Rs. Crore) Gross District Sl. District Agriculture Rank Industry Rank Services Rank Domestic Rank No Product (GDDP) 1 Bengaluru Urban 1.7 5 15.8 1 82.4 1 859154 1 2 Dakshina Kannada 9.6 10 38.9 2 51.5 2 125140 2 3 Belagavi 22.6 1 23.3 4 54.1 4 91449 3 4 Tumakuru 19.6 4 30.1 3 50.3 5 82626 4 5 Mysuru 20.2 3 16.9 9 62.9 3 80676 5 6 Shivamogga 23.3 6 22.9 8 53.7 7 63028 6 7 Udupi 15.1 15 27.9 5 57.0 8 59236 7 8 Mandya 15.9 16 22.6 12 61.5 10 53318 8 9 Bagalkote 19.2 14 27.7 7 53.1 11 53094 9 10 Dharwad 8.3 30 25.0 11 66.7 6 52941 10 11 Chikkamagaluru 23.8 8 28.9 6 47.3 14 52893 11 12 Hassan 21.3 13 16.3 17 62.4 9 52632 12 13 Vijayapura 35.0 2 16.5 20 48.5 16 46483 13 14 Kalaburagi 25.9 12 19.1 16 55.0 13 45868 14 15 Ballari 12.6 28 29.3 10 58.1 12 45536 15 16 Davanagere 31.9 7 20.5 18 47.6 22 40352 16 17 Raichur 30.7 9 16.5 23 52.8 17 40226 17 18 Uttara Kannada 21.0 17 20.4 19 58.7 15 39783 18 19 Chitradurga 32.1 11 15.4 24 52.5 21 37293 19 20 Kolar 19.6 21 25.6 15 54.8 19 36492 20 21 Bengaluru Rural 18.1 25 29.9 14 52.0 23 35599 21 22 Ramanagara 16.2 29 32.0 13 51.8 24 33799 22 23 Bidar 21.3 22 16.8 26 61.9 18 32777 23 24 Haveri 21.2 24 17.4 25 61.4 20 31989 24 25 Chikkaballapur 26.2 18 21.0 22 52.8 25 31671 25 26 Vijayanagar 21.1 26 25.3 21 53.6 26 29433 26 27 Koppal 30.2 20 18.7 28 51.0 29 26804 27 28 Chamarajanagar 23.2 27 20.1 27 56.7 27 26064 28 29 Gadag 15.7 31 20.0 29 64.2 28 22891 29 30 Yadagir 29.9 23 16.8 30 53.2 30 22754 30 31 Kodagu 45.2 19 13.1 31 41.7 31 17995 31 State 13.7 20.9 65.4 2269995 Source: Karnataka: Directorate of Economics and Statistics, Government of Karnataka. It is evident from the Table 1.8, that the districts which are better in services and industries will fare well with overall growth in DDP. The districts which are at very lowest positions are well placed in Agriculture sector, however, due to less presence of industries and services establishments, these districts fared poorly. Further due to addition of new data items viz., Private Corporate part etc., and availability of new data sources in computation of GSDP of the State, identification of suitable physical indicators with respect to each sector Karnataka Economic Survey 2023-24  36 State Income, Prices & Inflation to be allocated for the districts is in process. Because of data limitations, it may not be very useful to analyse sector-wise district estimates between any two given points of time as these estimates have not yet firmed up. The district wise and sector wise contribution to the Gross State Domestic Product and per capita Income is presented in Table 1.9 Table 1.9 District wise and Sector wise contribution to GSDP and Per capita Income for 2022-23 Gross District Per capita Sl. No District Agriculture Industry Services Domestic Income (Rs) Product (GDDP) 1 Bagalkote 3.3 3.1 1.9 2.3 226482 2 Bengaluru Urban 4.8 28.6 47.7 37.8 760362 3 Bengaluru Rural 2.1 2.2 1.2 1.6 291083 4 Belagavi 6.7 4.5 3.3 4.0 149710 5 Ballari 1.8 2.8 1.8 2.0 278538 6 Bidar 2.3 1.2 1.4 1.4 152141 7 Vijayapura 5.2 1.6 1.5 2.0 169253 8 Chamarajanagar 2.0 1.1 1.0 1.1 202494 9 Chikkaballapur 2.7 1.4 1.1 1.4 200424 10 Chikkamagaluru 4.1 3.2 1.7 2.3 377968 11 Chitradurga 3.9 1.2 1.3 1.6 177777 12 Dakshina Kannada 3.9 10.3 4.3 5.5 492074 13 Davanagere 4.2 1.7 1.3 1.8 193151 14 Dharwad 1.4 2.8 2.4 2.3 231939 15 Gadag 1.2 1.0 1.0 1.0 169704 16 Kalaburagi 3.8 1.8 1.7 2.0 139361 17 Hassan 3.6 1.8 2.2 2.3 238029 18 Haveri 2.2 1.2 1.3 1.4 157931 19 Kodagu 2.6 0.5 0.5 0.8 260558 20 Kolar 2.3 2.0 1.3 1.6 187284 21 Koppal 2.6 1.1 0.9 1.2 152489 22 Mandya 2.7 2.5 2.2 2.3 237220 23 Mysuru 5.2 2.9 3.4 3.6 215398 24 Raichur 4.0 1.4 1.4 1.8 164705 25 Ramanagara 1.8 2.3 1.2 1.5 249998 26 Shivamogga 4.7 3.0 2.3 2.8 290893 27 Tumakuru 5.2 5.2 2.8 3.6 245735 28 Udupi 2.9 3.5 2.3 2.6 414274 29 Uttara Kannada 2.7 1.7 1.6 1.8 220984 30 Vijayanagar 2.0 1.6 1.1 1.3 159868 31 Yadagiri 2.2 0.8 0.8 1.0 153247 State 100.0 100.0 100.0 100.0 304474 Source: Karnataka: Directorate of Economics and Statistics, Government of Karnataka. Karnataka Economic Survey 2023-24  State Income, Prices & Inflation 37 Further, It is evident from Table 1.9, Bengaluru Urban District stood first in the total District Income as well as per capita district income for the year 2022-23. Bengaluru Urban District contributes 37.8% to GSDP at current Prices followed by Dakshina Kannada (5.5%), Belagavi (4.0%). Bengaluru Urban District tops in secondary and tertiary sectors due to high concentration of major industries and infrastructure facilities. Each district has a potential for growth in one or the another sector which can be used by the district planning committees. This supports the NITI Aayog’s aspirational programme “District as a Fulcrum of Development” to strengthen and enhance the GDP. The per capita income (in rupees) at current prices for all 31 districts for the year 2022-23 is presented in Figure 1.4. Figure 1.4: District wise Per Capita Income (in rupees) for the year 2022-23 District income is also a measure of the level and growth of economic development prevailing in the district level. It is a useful policy indicator to monitor the nature and degree of inter-district variations as well as, Karnataka Economic Survey 2023-24  38 State Income, Prices & Inflation disparities in the process of economic growth at the State level. A simple statistical indicator of inter-district variations in the levels of district income is the coefficient of variation. Figure 1.5 shows these computed values across the four divisions and at the State level. Figure 1.5: Inter-district variations of Gross District Income and Per Capita Income by Divisions in Karnataka for 2022-23 Figure 1.5 indicates the variations in gross district and per capita district income among the revenue regions (divisions) of the State.The highest variation is evident with respect to Bengaluru division, if Bengaluru Urban District is included. Excluding Bengaluru Urban district, these inter-district variations in district income and per capita district income, get remarkably reduced at the division and State levels which is nothing but the districts without Bengaluru Urban is fairly developed across all the districts. The growing inter-district variation is an important indicator and a source of broader inter-regional disparities in the process of State’s economic development. However, a low coefficient of variation as such, does not necessarily imply either a higher or a lower district economic growth or regional disparity. Figure 1.6: Division wise Per Capita Income Karnataka Economic Survey 2023-24  State Income, Prices & Inflation 39 It can be observed from Figure 1.6 that Kalaburgi revenue region (comprising Ballari, Bidar, Kalaburgi, Koppal, Raichuru, Vijayanagar and Yadagiri districts), stood lowest in the per capita income followed by Belagavi and Mysore regions due to less presence of industries and service sectors enterprises in these regions. Hence there is a dire need for development of industries and services in these regions through encouraging private investments. 1.11 PRICES Price is one of the key indicators in the economic planning process. They provide an economic mechanism by which goods and services are distributed among the consumers. Changes in prices have a direct bearing on all sections of the society irrespective of their level of living. Prices determine what goods are to be produced and in what quantities. They also indicate the demand and supply of goods and services in the economy. The wholesale and retail inflation can be measured in two ways viz., Wholesale Price Index and Consumer Price Index. 1.12 INFLATION Inflation is an increase in the level of prices of goods and services over time. It is the constant rise in the general level of prices where a unit of currency buys less than it did in prior periods. It indicates the purchasing power of a Nation’s currency. In India commonly used inflation indices are the Wholesale Price Index (WPI) and the Consumer Price Index (CPI). As the name indicates the WPI measures Price at the wholesale level and CPI at the consumer level. Beyond the basics, the number and types of items included in the WPI and CPI basket differ and so does the weights given to these items. Food has a larger weight in CPI than WPI, the CPIs are therefore more sensitive to changes in prices of food items. Whereas in Wholesale Price Index (WPI) the fuel and power group has a much higher weight compare to the Consumer Price Index (CPI). During 2023-24, based on inflation rate of All India Wholesale Price Index (WPI) is increased to 1.18% in 8 (April-November) months. During the corresponding period of previous year inflation rate was increased by 0.13%. During 2023-24, based on inflation rate of All India Consumer Price Index (CPI) is increased to 3.60% in 8 (April-November) months. During the corresponding period of previous year inflation rate was increased by 3.70%. 1.13 ALL INDIA WHOLESALE PRICE INDEX Wholesale Price Index measures the average change in the prices of commodities for bulk sale at the level of early stage of transactions. The index basket of the WPI covers commodities in three major groups namely Primary Articles, Fuel and Power and Manufactured products. Wholesale Price Index is released by the Office of Economic Advisor (OEA), Department of Industrial Policy and Promotion, Ministry of Commerce and Industry. The base year for this index is 2011-12=100. The index basket of the present 2011-12 series has a total of 697 items including 117 items of Primary Articles, 16 items for Fuel and Power and 564 items for Manufactured Products. WPI basket does not cover services. Wholesale Price Index is used to estimate inflation at the Wholesale transaction level. It is also used for estimating GDP by Central Statistical Office (CSO). This index is released every month at the National level. Karnataka Economic Survey 2023-24  40 State Income, Prices & Inflation During 2022-23 and 2023-24 Wholesale price index analysis given below. ¯¯ During 2023-24, the Index of all commodities increased from 151.1 in April to 152.9 in November 2023, showing an increase of 1.18%. ¯¯ During 2022-23, the index of all commodities is increased from 152.3 in April to 152.5 in November 2022, showing an increase of 0.13%. ¯¯ The Annual rate of inflation, based on monthly WPI, stood at 0.26% for the month of November 2023 (over November 2022) During 2023-24 (April-November) Group-Wise changes in WPI are as follows. ¯¯ Primary Articles (Weight 22.62), the index for this major group rose by 5.11% in 8 months. ¯¯ Fuel and Power (Weight 13.15), the index for this major group increased by 1.70% in 8 months. ¯¯ Manufactured Products (Weight 64.23), the index for this major group decreased by 0.71% in 8 months. The details of annual all India wholesale price index from April to November for the consecutive years 2021-22, 2022-23 and 2023-24 are presented in Appendix 1.7 and group wise All-India Wholesale Price Index since 2016-17 are given in Appendix 1.8. The Figure 1.7 shows group wise changes in WPI. Figure: 1.7 Group wise changes in WPI 1.14 WHOLESALE PRICE INDEX OF KARNATAKA STATE FOR 33 AGRICULTURAL COMMODITIES This index is useful to monitor the trends in prices at the first stage of commercial transaction and to estimate the State Domestic Products. The main source of primary data for the construction of this Index is (1) 40 Agricultural Produce Market Committees (APMCs) of Agricultural Marketing Department situated across the State, who compiles the prices of agricultural commodities (2) Directorate of Sugar (3) Coffee, Tobacco and Spices Boards. Karnataka Economic Survey 2023-24  State Income, Prices & Inflation 41 During 2022-23 and 2023-24 (April-November) Wholesale Price index of Karnataka State 33 agricultural commodities analysis given below. ¯¯ During 2023-24, the Index of Wholesale price is increased from 1649 in April to 1878 in November 2023, showing an increase of 13.8% in 8 months ¯¯ During 2022-23, the Index of Wholesale price is decreased from 1658 in April to 1634 in November 2022, showing a decrease of 1.44% in 8 months. ¯¯ In 2023, November index is 1878 and compared to 2022 November index (1634) the annual Index increased to 14.9%. During 2023-24 (April-November) the statistics of Group-wise WPI is as follows. ¯¯ During 2023, when compared from April to November, all commodities index is increased by 13.8%. The index of Pulses group is increased by 30.47%, Oil seeds group index is increased by 16.07%, Miscellaneous group index is increased by 15.83%,Cereals group index is increased by 14.3%, Condiments and Spices group is increased by 12.9%, and Gur and Sugar group index is increased by 2.18% whereas the index of Fibre group is decreased by 0.4% ¯¯ During April to November 2023, the prices of Onion, Sesame and Potato are increased by 295.0%, 107.38% and 54.6% respectively. Whereas the prices of Castor, Coriander and Tamarind are decreased by 28.7%, 25.32% and 7.90% respectively. WPI numbers of agricultural commodities in Karnataka since 2012-13 are given in Appendix 1.9 and group wise index numbers for 2021-22, 2022-23 and 2023-24 are given in Appendix 1.10. The trend of WPI for 33 agricultural commodities in Karnataka for the year 2022-23 and 2023-24 are shown in Figure. 1.8. Figure 1.8 Average Trend of WPI in Karnataka 1.15 CONSUMER PRICE INDEX Consumer Price Index is a measure of change in retail prices of goods and services consumed by defined population group in a given area with reference to a base year. Karnataka Economic Survey 2023-24  42 State Income, Prices & Inflation Presently the consumer price indices compiled in India are CPI for Industrial workers (CPI-IW), CPI for Agricultural Labourers (CPI-AL), CPI for Rural Labourers (CPI-RL) and CPI for Rural and Urban (CPI–R& U). The first three indices are constructed and released by the Labour Bureau, Shimla and the fourth by the Central Statistical Office (CSO), New Delhi. In Karnataka, the Directorate of Economics & Statistics constructs and releases only CPI-IW for 9 centres as state series every month. Consumer price index is widely considered as a Barometer of inflation, a tool for monitoring price stability. Also, the Dearness Allowance of Government employees and wage contracts between labour and employer is based on this index. 1.16 CONSUMER PRICE INDEX FOR INDUSTRIAL WORKERS The target group of CPI-IW is workers of factories, mining, plantations, motor transport, docks, railways & electricity. This index is mainly used to determine the dearness allowance for the employees in both the public and private sectors. At the National level, from September 2020 the base year of CPI (IW) for Central series has been revised from 2001=100 to 2016=100. In this series CPI-IW is constructed for 88 selected industrially developed centres across the country, out of which 7 centres namely Bengaluru, Belagavi, Hubballi-Dharwad, Madikeri, Mysuru, Davanagere and Chikmagaluru are based in Karnataka. CPI-IW in April and November for the year 2021-22, 2022-23 and 2023-24 in All India and Karnataka are presented in Appendex-1.11. The trend of all India CPI-IW of 2022-23 and 2023-24 is shown in Figure 1.9. During 2021-22, 2022-23 and 2023-24, All India level consumer price Index for industrial workers analysis given below. ¯¯ All India level consumer price Index of November 2022 was 132.5 points, corresponding period of this year (November 2023) the points moved to 139.1, which indicates annual inflation rate of 4.9%. During 2022-23, index of November 2022 was 132.5 points, corresponding period of previous year (November 2021) the index was 125.7 points, shows that the annual inflation rate was 5.4%. ¯¯ During 2023-24 April-November 8 month’s average index is 137.4 points, compared to corresponding period of the previous year average index was 130.3 and inflation rate is 5.4%. During 2022-23 April- November 8 month’s average index was 130.3 points, compared to corresponding period of the previous year average index was 122.8 and inflation rate was 6.1%. Figure 1.9: All India Consumer Price Index Karnataka Economic Survey 2023-24  State Income, Prices & Inflation 43 1.17 STATE CONSUMER PRICE INDEX FOR INDUSTRIAL WORKERS In Karnataka, the Directorate of Economics & Statistics constructs CPI-IW for 9 centres viz., Ballari, Bhadravathi, Dandeli, Kalaburagi, Hassan, Mandya, Mangaluru, Raichur and Tumakuru. With effect from February 2022 the base year for the State series index has been revised from 1987-88=100 to 2018=100. Even though revision of base year 2018=100 effected from February 2022 for State series, the previous year’s indices has been worked out and presented in the related Appendices. During 2023-24, among the 9 State series centers, General Index of Mangaluru and Mandya centres increased by 5.0% and 4.9% respectively. During 2023-24, the General Index of Mangaluru centre is increased from 125.6 in April to 131.9 in November 2023 showing an increase of 5.0% and from April to November 8 months’ average is 129.6 points showing an increase of 7.3% compared to corresponding period of previous year (120.7). The details of the CPI-IW for All India and Karnataka are presented in Appendix-1.12, 1.13 and 1.14. 1.18 CONSUMER PRICE INDEX FOR AGRICULTURAL LABOURERS Consumer Price Index for Agricultural Labourers (CPI-AL) for 20 States, including Karnataka, is being constructed every month by the Labour Bureau-Shimla, based on the information obtaining from the Field Operation Division of National Sample Survey Office. This index is used for fixation and revision of minimum wages in agriculture sector. The base year for this index is 1986-87=100. The general index of Karnataka is increased by 8.21% in November 2023 over April 2023 as against an increase in index by 6.18% at all India level. During 2023-24 (upto November 2023), in Karnataka, the average general index has increased to 1367 from 1270 during same period of 2022-23, thus showing an increase of 7.63%. At the all-India level, the index was increased by 6.86%. CPI-AL in April and November for the years 2021-22 2022-23 and 2023-24 are presented in Appendix -1.15. The CPI-AL at All India and Karnataka from 2012-13 are given in Appendix - 1.16. The Food and General Index of Agricultural Labourers during 2023-24 is illustrated in the Figure 1.10. Figure 1.10. Consumer Price Index of Agricultural Labourers Karnataka Economic Survey 2023-24  44 State Income, Prices & Inflation 1.19 PRICE SITUATION IN RURAL AND URBAN KARNATAKA Directorate of Economics & Statistics, Government of Karnataka, collects retail prices of a basket of essential commodities from selected centres in rural and urban areas in order to assess the price situation in the State. Rural retail prices are collected every month and urban retail prices are collected every week for the construction of monthly Rural Retail Price Index Numbers and Urban Retail Price Index Numbers. For both these index numbers, with effect from February 2022 the base year has been revised from 1970=100 to 2018=100. These index numbers are based on un-weighted diagram and focuses on broad price trends in rural and urban areas, to guide policy decisions. (a) Price Situation in Urban Areas Every week, retail prices of 26 important commodities are collected from 31urban centres in the State in order to construct Urban Retail Price Index (URPI). During 2023-24 the index was 138.3 in April 2023 rose to 159.45 in November 2023 showing an increase of 15.2%. The rise in index is attributed to the increase in prices of Onion (126.81%), Tur (38.13%), Green Gram (19.97%) and Jowar (18.31%). During 2023-24 (up to November 2023), the average URPI (146.9) increased by 9.69% over the corresponding period of the previous year (133.92). (b) Price Situation in Rural Areas For the construction of monthly Rural Retail Price Index (RRPI), the retail prices of 32 essential commodities are collected from 452 villages every month. During 2023-24, the index in April 2023 increased from 125.49 to 142.42 in November 2023 showing an increase of 13.4%. This increase was mainly due to increase in price of Onion (172.41%), whereas price of Garlic increased to 79.49%. Up to November 2023, the average RRPI was 135.58 showing an increase of 8.43% over the corresponding period of the previous year (125.03). The details of Urban and Rural Retail Price Index Numbers in Karnataka are given in Appendix-1.17. Way Forward The Gross State Domestic Product (GSDP) is expected to achieve 6.6% growth during 2023-24 as compared to 8.1% during 2022-23. ¯¯ Government of Karnataka has a vision to achieve $1Tn GDP by implementing strategies envisaged in SDG 2030 and $1Tn vision document. ¯¯ Karnataka aims to strengthen its decentralized governance to make District as a fulcrum of growth and development by strengthening capacity building, infrastructure support and delegation of powers. ¯¯ The Government has constituted an advisory committee on GSDP to review the methodology, quality, Consistency of input data used for the estimation of GSDP and also recommend suitable measures for timely flow of data and data sources. ¯¯ To increase the GSDP of the state, the industrial policy 2020-25 has envisages a third position in merchandise export in the next five years. Amended Industrial Facilitation Act and brought in Affidavit Based Clearance System to promote investments in industrial sector. Ease Of Doing Business is being promoted by minimising regulatory compliance burden. ¯¯ To increase the service sector contribution, Government has announced new IT policy 2020-25 with special focus on promoting IT beyond Bengaluru ¯¯ New Tourism Policy 2020-25 envisages avenues to promote private investments so as to attract domestic and foreign tourists. ¯¯ Optimal utilization of under utilized and unutilized Government land and building for revenue generation with PPP. Karnataka Economic Survey 2023-24