<p>Karnataka’s emergence as the state with the highest per capita income in India for the financial year 2024-25 marks a significant milestone, with a 93.6 per cent growth over the past decade. The per capita Net State Domestic Product (NSDP) of Rs 2,04,605 at constant prices surpasses the national average of Rs 1,14,710, positioning Karnataka ahead of traditionally stronger states like Tamil Nadu. However, this success story is set against a backdrop of widening regional disparities. </p>.<p>While Karnataka surges ahead, states like Uttar Pradesh, Bihar, and Jharkhand continue to languish at the bottom, some even withholding their income data, perhaps to avoid uncomfortable comparisons. The Union finance ministry, which released the data in Parliament, attributes these disparities to structural and sectoral imbalances, gaps in governance, and uneven economic bases. It is thus imperative for the Centre to study the policy framework of well-performing states, especially their success in leveraging technology, investment, and governance reforms to achieve sustained growth.</p>.<p>The ruling Congress has seized this moment to credit its flagship welfare programmes for the rise in the per capita income. The party has claimed that direct cash transfers worth Rs 93,000 crore under its guarantee schemes have fuelled both economic demand and inclusive growth. Terming this the ‘Karnataka model of governance’, the leadership has linked the economic momentum to social justice outcomes, robust GST collections, investment inflows, and continued dominance in the IT and aviation sectors.</p>.<p>While the state has reason to celebrate, it must not ignore critical structural weaknesses. Karnataka’s economy is disproportionately reliant on the service sector, especially Information Technology Enabled Services (ITES), which contributes about 68 per cent of the Gross State Domestic Product (GSDP). Such over-dependence creates vulnerability to external shocks, including global tech slowdowns and geopolitical shifts. </p>.<p>Economists have long cautioned against such lopsided development, advocating for expanding the base of the manufacturing sector for long-term economic resilience and job creation across skill levels. Equally pressing is the stark intra-state disparity. Bengaluru Urban accounts for a large share of the state’s GDP and per capita income, while several districts, especially in Northern Karnataka, continue to lag woefully behind. </p>.<p>This divide threatens social cohesion and could eventually dampen overall growth prospects. Karnataka's economic leadership is commendable, but there is an urgent need to address internal disparities and reduce sectoral over-reliance through strategic diversification and balanced regional development. Only then can the state’s success serve as a sustainable model for the rest of the country.</p>
<p>Karnataka’s emergence as the state with the highest per capita income in India for the financial year 2024-25 marks a significant milestone, with a 93.6 per cent growth over the past decade. The per capita Net State Domestic Product (NSDP) of Rs 2,04,605 at constant prices surpasses the national average of Rs 1,14,710, positioning Karnataka ahead of traditionally stronger states like Tamil Nadu. However, this success story is set against a backdrop of widening regional disparities. </p>.<p>While Karnataka surges ahead, states like Uttar Pradesh, Bihar, and Jharkhand continue to languish at the bottom, some even withholding their income data, perhaps to avoid uncomfortable comparisons. The Union finance ministry, which released the data in Parliament, attributes these disparities to structural and sectoral imbalances, gaps in governance, and uneven economic bases. It is thus imperative for the Centre to study the policy framework of well-performing states, especially their success in leveraging technology, investment, and governance reforms to achieve sustained growth.</p>.<p>The ruling Congress has seized this moment to credit its flagship welfare programmes for the rise in the per capita income. The party has claimed that direct cash transfers worth Rs 93,000 crore under its guarantee schemes have fuelled both economic demand and inclusive growth. Terming this the ‘Karnataka model of governance’, the leadership has linked the economic momentum to social justice outcomes, robust GST collections, investment inflows, and continued dominance in the IT and aviation sectors.</p>.<p>While the state has reason to celebrate, it must not ignore critical structural weaknesses. Karnataka’s economy is disproportionately reliant on the service sector, especially Information Technology Enabled Services (ITES), which contributes about 68 per cent of the Gross State Domestic Product (GSDP). Such over-dependence creates vulnerability to external shocks, including global tech slowdowns and geopolitical shifts. </p>.<p>Economists have long cautioned against such lopsided development, advocating for expanding the base of the manufacturing sector for long-term economic resilience and job creation across skill levels. Equally pressing is the stark intra-state disparity. Bengaluru Urban accounts for a large share of the state’s GDP and per capita income, while several districts, especially in Northern Karnataka, continue to lag woefully behind. </p>.<p>This divide threatens social cohesion and could eventually dampen overall growth prospects. Karnataka's economic leadership is commendable, but there is an urgent need to address internal disparities and reduce sectoral over-reliance through strategic diversification and balanced regional development. Only then can the state’s success serve as a sustainable model for the rest of the country.</p>
