Karnataka - Economy

Economy

Karnataka, which had an estimated GSDP (Gross State Domestic Product) of about US$ 58.23 billion in 2008-09 fiscal year. Karnataka recorded the highest growth rates in terms of GDP and per capita GDP in the last decade compared to other states.

The state registered a GSDP growth rate of 7% for the year 2007-2008. Karnataka's contribution to India's GDP in the year 2004-05 was 5.2%. Karnataka was the fastest growing state over the past decade in terms of GDP and per capita GDP. With GDP growth of 56.2% and per capita GDP growth of 43.9%, Karnataka now has the sixth highest per-capita GDP of all states. Till September 2006 Karnataka received a Foreign Direct Investment of 78.097 billion ($ 1.7255 billion) for the fiscal year 2006-07, placing it third among the states of India. At the end of 2004, the unemployment rate in Karnataka was 4.94% compared to the national rate of 5.99%. For the fiscal year 2006-07, the inflation rate in Karnataka was 4.4%, compared to the national average of 4.7%. As of 2004-05, Karnataka had an estimated poverty ratio of 17%, less than the national ratio of 27.5%.

Nearly 56% of the workforce in Karnataka is engaged in agriculture and related activities. A total of 12.31 million hectares of land, or 64.6% of the state's total area, is cultivated. Much of the agricultural output is dependent on the southwest monsoon as only 26.5% of the sown area is irrigated.

Karnataka is the manufacturing hub for some of the largest public sector industries in India, including Hindustan Aeronautics Limited, National Aerospace Laboratories, Bharat Heavy Electricals Limited, Indian Telephone Industries, Bharat Earth Movers Limited and HMT (formerly Hindustan Machine Tools), which are based in Bangalore. Many of India's premier science and technology research centers, such as Indian Space Research Organization, Central Power Research Institute, Bharat Electronics Limited and the Central Food Technological Research Institute, are also headquartered in Karnataka. Mangalore Refinery and Petrochemicals Limited is an oil refinery located in Mangalore.

Since the 1980s, Karnataka has emerged as the pan-Indian leader in the field of IT (information technology). As of 2007, there were nearly 2,000 firms operating out of Karnataka. Many of them, including two of India's biggest software firms, Infosys and Wipro are also headquartered in the state. Exports from these firms exceeded 50,000 crores ($12.5 billion) in 2006-07, accounting for nearly 38% of all IT exports from India. The Nandi Hills area in the outskirts of Devanahalli is the site of the upcoming $22 Billion, 50 square kilometer BIAL IT Investment Region, one the largest infrastructure projects in the history of Karnataka. All this has earned the state capital, Bangalore, the sobriquet Silicon Valley of India.

Karnataka also leads the nation in biotechnology. It is home to India's largest biocluster, with 158 of the country's 320 biotechnology firms being based here. The state also accounts for 75% of India's floriculture, an upcoming industry which supplies flowers and ornamental plants worldwide.

Seven of India's leading banks, Canara Bank, Syndicate Bank, Corporation Bank, Vijaya Bank, Karnataka Bank, Vysya Bank and the State Bank of Mysore originated in this state. The coastal districts of Udupi and Dakshina Kannada have a branch for every 500 persons—the best distribution of banks in India. As of March 2002, Karnataka had 4767 branches of different banks with each branch serving 11,000 persons, which is lower than the national average of 16,000.

A majority of the silk industry in India is headquartered in Karnataka State, much of it in Doddaballapura, and the state government intends to invest 70 crore in a "Silk City" at Muddenahalli, near Bangalore International Airport.