Hit by the severe drought prevailing in majority of taluks in the state, Karnataka's gross state domestic product (GSDP) is projected to grow at 9.6% during 2018-19, a dip of 80 basis points, as compared to 10.4% in 2017-18, according to Economic Survey for 2018-19 tabled in the state legislature on Friday.

A contraction of 4.8% in the agriculture sector is estimated because of the drought situation prevailing across 156 taluks of the state due to scarcity of rain. In contrast, the GDP at the national level is projected to grow at 7.2% at constant prices (2011-12).

At current prices, the GSDP is anticipated to reach Rs 15,10,250 crore with a growth of 13.9% and GDP is likely to attain a level of Rs 1,88,40,731 crore with a growth of 12.3%, according to Economic Survey of Karnataka for 2018-19, released in the state legislature on Friday.

The share of Karnataka's GSDP in all India GDP is 8% during 2018-19.

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.

The industry sector is set to record a robust growth of 7.4% as against 4.7% in the previous year, while the services sector is set to grow at 12.3% during the year as against 12.2% in the previous year, the Survey said.

Fall in foodgrain production

The GSVA growth rate of agriculture sector is -4.8% in 2018-19 compared to 14.2% in 2017-18 on account of fall in production of food grains from 144 lakh tonne in 2017-18 to 100 lakh tonne (expected) during 2018-19 due to drought conditions in 100 taluks in kharif season and 156 taluks in rabi season.

The industry sector (comprising mining and quarrying, manufacturing, construction and electricity, gas and water supply) is expected to grow by 7.4% in 2018-19.

The contribution of agriculture and allied activities and industry sector to the overall GSDP (from 11.67% to 10.11% and 22.45% to 22.01%, respectively) saw a marginal decrease in 2018-19 as against 2017-18. During the last few years, services sector has been contributing as the largest component of GSDP.

The services sector saw a marginal increase from 65.88% in 2017-18 to 67.87% in 2018-19. The contribution of real estate, professional services and ownership of dwellings is highest with 36.02% followed by manufacturing (14.46%), trade and repair services (9.80% and crops (6.92%).

State finances

The state’s revenue receipts have increased to Rs 1,66,395.66 crore in 2018-19 (BE) from Rs 1,46,032.90 crore in 2017-18 (RE), 13.94% increase in 2018-19 (BE) over 2017-18 (RE). The growth in revenue receipts is primarily due to the growth of tax revenue.

The per capita state’s own tax revenue has increased from Rs 13,669 in 2017-18 (RE) to Rs 15,657 in 2018-19 (BE). The tax revenue is expected to increase from Rs 1,23,469.57 in 2017-18 (RE) to Rs 1,42,836.08 crore in 2018-19 (BE), thus indicating a growth rate of 15.69%, the Economic Survey revealed.

The state continues to have an overall revenue surplus, albeit at reduced levels.