From Our Special Correspondent
Daijiworld Media Network - Bangalore
Bangalore, Jun 18: With Karnataka’s growth story showing a dismal record as the gross state domestic product (GSDP) of the state grew at a compounded annual growth rate (CAGR) of mere 6.8 % between 2008-11, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has set an ambitious growth agenda for the Siddaramaiah-led Congress regime by according highest priority to “governance” and instil confidence among investors to bring the state back on the high growth path.
The ASSOCHAM Growth Agenda submitted to the newly elected government last week and released to the media by R Sanna Reddy and J Crasta, Chairman and Co-chairman, Southern Regional Council respectively and National Secretary General D S Rawat pointed out that the State ranked lowest amid southern states of Andhra Pradesh (7.6 %), Kerala (8.9 %), Tamil Nadu (10.2 %) and remained even below the all-India average 8 %.
The Congress government in the State has a ''herculean task” at its hand to revive the growth of core sectors of agriculture and allied activities, industry and services, which grew at a CAGR of 6.3 %, 12 % and 12.1 % during 2004-07 and dipped to depressingly low levels of 4.5 %, 3.4 % and 9.3 % respectively during 2008-11, the ASSOCHAM said.
“The state needs to urgently shift its focus to the areas of governance, infrastructure, imparting skill development and training and also perk up the education scenario, boosting exports, reviving traditional sick industrial units and others to bring Karnataka’s economy back on the growth trajectory,” said Sanna Reddy.
“Attracting private and public sector investments, standardization of local taxes, providing bailout package to micro-small and medium enterprises (MSMEs), promoting the industrial sector, accelerating agricultural growth and promoting renewable energy sources are certain significant areas,” the ASSOCHAM said pointing out that focus on these areas could transform Karnataka’s economy.
Rural employment, healthcare, housing, education, transportation, mining and minerals, tourism, urban development, irrigation, and water resources management, biotechnology, foreign direct investment (FDI) and public-private partnership (PPP) were other key areas which the new state government needs to focus on, it said.
Punish the Corrupt; Reward Whistleblowers
On the governance front, the ASSOCHAM said the state needs to implement stringent rules to punish the corrupt while rewarding the whistleblowers and provide them requisite protection.
“There is also a need to improve the governance infrastructure by infusing more transparency and accountability, strengthening the Lokayukta, improving financial set up of local governing bodies and civic agencies, providing safe drinking water to the state inhabitants, regulating chit fund and ponzi scheme operators and assuring women safety and security at workplace is also of supreme importance as the information technology sector comprises about 30 % of female staff,” Crasta said.
Non-availability of land for setting up industries was a major bottleneck for industrial sector growth in Karnataka, the ASSOCHAM said and urged the new government to formulate a land acquisition and rehabilitation policy with options of equity partnership for land providers, employment opportunities, stable monthly income and others.
Inadequate power supply was a major hindrance to new and existing industrial units in Karnataka, thus the state government should give sops and tax concessions to companies investing in locations with acute power shortage, said Crasta.
The ASSOCHAM has also suggested setting up district-level training institutes on a public-private partnership model to provide skilled manpower for the industries. Besides, special incentive package may be given to sectors like information technology which has been significantly affected due to global recession.
The state government must engage the private sector and introduce an investor-friendly industrial policy to boost the investment scenario in Karnataka by improving bureaucratic efficiency, infrastructure facilities and ease of land acquisition, Sanna Reddy said.
Besides, the state government should also provide tax concessions, product market conditions and exit policies which are certain effective tools of private investment attraction, added Crasta.
Investment Friendly Environment for FDI
The state government should promote an investment friendly environment to attract foreign direct investment (FDI) and upgrade economic infrastructure, manufacturing facilities, infuse healthy competition for overall market development and update existing laws to protect rights and intellectual properties of investors.
The ASSOCHAM said the Government must aggressively invest in upgrading the social and physical infrastructure, offer tax exemptions, incentives, schemes and subsidies to encourage investments from leading industrialists and promote industrially backward regions through cluster development approach based on PPP model to spur investment and employment scenario.
For the growth and development of micro, small and medium enterprises (MSMEs) in Karnataka, the ASSOCHAM has suggested simplifying the credit guarantee procedures to meet long-term finance needs of MSMEs.
Besides, MSMEs should be further given capacity-building stimulus packages, tax concessions and subsidies for high-technology absorptions, more so as the sector plays a significant role in enhancing manufacturing output, contributes in boosting exports and generates employment.
The state government should promote growth and development of small scale industries, cottage industries, handicrafts, floriculture and horticulture to spurt employment.
The government should also provide financial assistance and food security to unemployed individuals and their families through non-profit organizations (NGOs) and self-help groups.
On the exports front, it is suggested that more sops be given to perk up export activities and more export promotion zones be set up for steel, cement, food processing, information technology, bio-technology and others.
Discourage Iron Ore Exports
However, the ASSOCHAM recommended that the state government must discourage iron ore exports from the state to boost the domestic supply and encourage private participation to bolster the state infrastructure.
Sectors like power, roads, broadband connectivity in rural and backward areas, public transport system, waste management and other basic infrastructure facilities may be developed on PPP basis.
ASSOCHAM has also suggested that the government must set up an experts’ body
to chalk out a plan for an effective multi-model transit system for urban and rural areas with increased private sector participation to ensure better connectivity via – airports, bridges, rail, roads and highways.
Boost to Agriculture; Farming Sector
The agriculture sector in Karnataka has been decelerating during the course of past few years and concerted efforts through separate programs to intensify growth targets linking crop intensity, water harvesting and community farming activities were needed.
Drip irrigation must be scaled up through government subsidy as lack of irrigation facilities has been affecting cropping pattern and the overall productivity. There was also the need to develop seed banks through private sector participation, besides, hybrid research in agriculture should also be promoted in the PPP mode.
ASSOCHAM has also suggested promoting organic farming to improve land productivity through advocacy amid farmers about unscientific use of pesticides and promoting innovative organic farming methods.
“Stress should be laid on adoption of organic farming in the state to get more value propositional returns, generate jobs in the areas of on-farm storage, processing, value addition, packaging and marketing, considering organic farms provide over 30 % more jobs per hectare as against non-organic farms,” it said.
Zero duty on agricultural inputs, farmer friendly crop-specific insurance schemes, providing affordable credit to agricultural farmers, handling post-harvest operations with minimum wastage, setting up high-quality infrastructure in PPP mode for horticulture promotion, imparting training to produce value-added products and other focus areas in the agriculture sector which need to be tackled on a long-term basis.
Education, health, administrative reforms, urban development and welfare of backward classes are certain other imminent issues that require urgent government attention and being a leading chamber ASSOCHAM was willing to partner the government in realizing the state’s growth potential, the Growth Agenda said.