High GDP, low unemployment, high poverty

Soumik Dutta I NT

Bengaluru: On the basis of per capita income, Karnataka is one of the richest states in India. It has a high GDP, and low unemployment rate, but surprisingly, has a high rate of poverty. The answer to this apparent paradox lies in the state’s unequal growth, mostly arising from the disproportionate contribution of the Bengaluru Urban district.

According to the Reserve Bank of India’s data on Indian states, Karnataka’s per capita income in 2020-21 was Rs 2.364 lakh, the highest among states with a population of more than 1 crore. However, the Karnataka economic survey 2022-23 shows that more than 36 per cent of the state’s gross domestic product (GDP), the total value of final goods and services in 2021-22 came from the Bengaluru Urban district.

The Bengaluru Urban district is home to approximately 96 lakh people according to figures from the district statistical office. It constitutes just about a sixth of the state’s population of about 6.10 crore (2011 Census). In 2011-2012; Karnataka was ranked seventh in terms of per capita income.

In 2013-14, the state overtook Tamil Nadu, and by 2015- 16, it surpassed Uttarakhand and Maharashtra, securing the fourth rank. By 2016-17, Karnataka’s per capita income had even outpaced that of Kerala, claiming the third rank. In 2021-22, Karnataka overtook Haryana, becoming the state with the highest per capita income.

The economic powerhouse of Bengaluru Urban, often referred to as India’s Silicon Valley, has had a huge part to play in Karnataka’s performance on this front. Accounting for an impressive Rs 7 lakh crore in economic activities for 2021-22, it constituted about 36 per cent of Karnataka’s GDP for the same period. According to data from the 2022- 23 Karnataka Economic Survey, none of the state’s remaining 29 districts individually contributed even 10 per cent to its Gross State Domestic Product (GSDP).

A noteworthy aspect of Karnataka’s economy is the heavy reliance on agriculture in the majority of its districts. In stark contrast, Bengaluru Urban’s agriculture sector contributes a meagre 0.5 per cent to its GDP, whereas in all other districts, agriculture makes up at least 10 per cent. For Yadgir, one of the poorest districts, agriculture contributes about 50 per cent of the GDP. T

here’s another apparent dichotomy at play in Karnataka; a low unemployment rate, but a high prevalence of poverty. India’s official estimates on poverty, last released for the year 2011-12, indicate that approximately one in five individuals in Karnataka (around 20 per cent of the population), remains below the poverty line. This translates to about 1.3 crore people earning less than Rs 902 and Rs 1,098 per month in rural and urban areas of Karnataka, respectively.

According to the government’s poverty estimates, Chhattisgarh has the highest poverty ratio among larger states, with nearly 39 per cent (or 1 crore) of its population living below the poverty threshold. This is followed by Jharkhand, Bihar, Odisha, Assam, Madhya Pradesh, and Uttar Pradesh.

Karnataka’s poverty headcount ratio is slightly below the national average of 21.9 per cent, but with a huge rural-urban disparity. In comparison to the national average of 25.7 per cent, rural poverty in Karnataka is relatively lower at 24.53 per cent. On the other hand, in urban areas, Karnataka’s poverty ratio stands at 15.25 per cent, slightly above the all-India average of 13.7 per cent.

According to the Periodic Labour Force Survey (PLFS) data published by the Ministry of Statistics and Programme Implementation, only 3.2 per cent of individuals aged 15 and above were reported as unemployed in Karnataka for the year 2021-22. This stands in contrast to the national average of 4.1 per cent.

Thus, despite the high incidence of poverty, Karnataka also lays claim to having one of the lowest unemployment rates in the nation. More recent poverty figures, such as the NITI Aayog’s Multidimensional Poverty Index suggests that only 13 per cent of the population is considered poor in Karnataka.

The per capita income of Karnataka is anchored by its urban centres, particularly Bengaluru. Income inequality is extremely difficult to measure, but high per capita incomes, when coupled with high poverty rates, generally reflect significant levels of income inequality. With a per capita income of Rs 6.2 lakh, Bengaluru Urban residents boast the highest GDP per capita in Karnataka.

They are followed by the districts of Dakshina Kannada (4.4 lakhs), Udupi (3.7 lahks), Chikkamangaluru (3.34 lakhs), Bengaluru Rural (3.19 lakhs), and Shivamogga (2.7 lakhs). Kalaburagi has the lowest per capita income at just Rs 1.25 lakhs. In 2019-20, when India’s GDP growth rate plummeted to 3