Chief Minister Siddaramaiah’s claim that Karnataka will defy the national trend of an economic slowdown this year is not only surprising but remains unsubstantiated. To be fair to Mr. Siddaramaiah, it is too early to expect him to have made an impact, but by the same logic, he cannot claim credit too for having done wonders in the short period of four months that he has been in office.
In fact, whatever little evidence there is — and economic data is always slow in trickling in — suggests that there is a perceptible slowing down of the State’s economy in the current year.
Data on tax collections, which always come ahead of output and employment data, indicate that Mr. Siddaramaiah has been a little too quick on the draw.
Significantly, the growth of commercial taxes, which account for about two-thirds of all taxes mopped up by the State, has increased by a little less than 15 per cent between April and July 2013 — more than 3 percentage points lower than during the same period last year.
Even more worrisome is the fact that this is the fourth year of decline.
Although Mr. Siddaramaiah may be banking on the good monsoon to lift the economy, the statistical fact that agriculture accounts for just 15 per cent of the State’s Gross State Domestic Product (GSDP), means that a bountiful harvest would not be enough to offset the slowdown in services and industry.
That industry is in a palpable slowdown is a constant refrain in industry circles. Anecdotal evidence — from industry as well as trade unions, which are quick to feel the heat from a restless workforce that suffers pay cuts or employment — reveals that the slowdown is affecting people on a here-and-now basis.
“The worst affected are the auto components, machine tools and engineering industries,” says the representative of an industry lobby.
Although garments and the IT industry “are making hay while the sun shines, because of the battered rupee,” it is only a matter of time before the overseas clients demand a price renegotiation, he warns.
A rising incidence of industrial unrest is generally a good indicator of economic health, especially when disputes centre over pay packets, says H.V. Harish, president, Bangalore Chamber of Industry and Commerce (BCIC).