Prosperity and Poverty – 2 faces of Bengaluru

Prosperity and Poverty – 2 faces of Bengaluru

Prosperity and poverty – prosperous Karnataka State’s poor secret.   Poor access to State healthcare and drinking water are the two major woes of the State.

The economy of Karnataka State is predominantly agrarian. In the total State Domestic Product, the contribution of agriculture and allied activities is 37 per cent. 65 per cent of the work force in the State depends on agriculture. 

Features of Karnataka Economy :

Karnataka economy is largely service oriented and income from the sector contributes half the state’s GDP with the agricultural and the industrial sector contributing to nearly 25% each. The major manufacturing oriented industries in the state include: Sugar. Paper.

Karnataka statistics :

Karnataka’s per capita State income was Rs.1,83,737 in 2017-18.  This was above the per capita National Income of Rs.1,12,835. 

According to the 15th Finance Commission the State’s poverty rate is at 21%.  Karnataka State has not fared well on the healthcare front.  The reason may be the frequent transfer of officers running the health programs. 

Traditional ploughing – Karnataka

Karnataka being IT capital of India, known as the home of technology and startups it is very difficult to explain why the poverty rate is very high.  The expected poverty rate is below 20%. 

Health care access – Prosperity and poverty :

Healthcare is a casualty as the citizens comprises of poor and middle class families among the elite and rich in the State.  There are many private hospitals but  very few can afford them.  

People who are poor has to either go in search of government hospitals or an NGO run hospital.  The other option is to visit the government run hospitals at Bengaluru city. 

Travelling to these hospitals in the city is also tiresome.  The roads are congested and the distance to travel is gruesome. 

Present scenario :

There is very poor agricultural growth rate and incomplete irrigation projects dragging for years as only 33% of the State’s area was irrigated. 

Karnataka took up several projects but the net result of these projects are not reflected in the performance in agricultural sector.

In the last 6 to 7 years, agriculture is either stagnant or shrinking.  It is -0.3%. 

Per-Capita Development Expenditure :

The per capita development expenditure in Karnataka during 2014-15, 2015-16(RE) and 2016-17(BE) was Rs.13928, Rs.15591 and Rs.17413 respectively as compared to all State’s average of Rs.10437, Rs.13545 and Rs.14404.The high percentage of committed revenue expenditure to revenue receipts (78%) in 2016-17(RE) reveals that the State has limited flexibility in allocation of its resources for new schemes.

Hence the need of the hour is expenditure rationalization/ re-calibration.

Non-tax Revenue :

The ratio of non-tax revenue to total receipts has been continuously declining over the years. This is due to low recovery of costs. In many departments, the revision of user charges, fees & fines and other such non-tax receipts have not taken place for many years. Even with revision of rates and better collection mechanisms, increase in revenues from this avenue may not be large due to existing low base.

State’s Borrowings :

The State’s borrowings are more expensive than the loans advanced by the government. The recipient boards and corporations are unable to service the loans given to them by the State government in view of low recovery of cost of their services from the consumers.

The debt to GSDP ratio has gone up, while it still remains below 20%.   In future there will be pressures from all sides to spend more.  There has to be caution on how finance-through more revenues rather than more debts.

Current Fiscal Challenges and Way Forward :

Despite the State’s broad successes in its fiscal consolidation efforts, the State government faces many fiscal challenges arising from limited potential for resource mobilization relative to GSDP, rigidities in the form of committed expenditure, and weak linkages between expenditure and development outcomes.

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