Shrinking farmlands in way of Karnataka's $1-trillion dream

Karnataka’s “rapidly shrinking land holdings” are among the major hurdles to the state becoming a $1-trillion economy by 2032, according to a report that also flagged tech hub Bengaluru's notorious traffic congestion as one of the areas of concern.

Made public on Thursday, the 374-page report brought out by the state government and the Federation of Indian Chambers of Commerce & Industry (FICCI) lays out a roadmap for Karnataka's trillion dollar ambitions. 

To vault into the $1-trillion club, Karnataka will need interventions costing Rs 152.87 lakh crore — Rs 22.93 lakh from the government and Rs 107.01 lakh crore from the private sector — over the next decade.

And this is not going to be easy as a host of obstacles across sectors lie between the ambition and its fulfillment. 

Take for example agriculture, which contributes 15% to the GSDP and is identified as a significant growth sector.

Fragmented land holdings are a big challenge in the sector, as per the report. 

Karnataka has 86.81 lakh farm holdings in an area of 118.05 lakh hectares. The average size of a holding is 1.36 hectares.

"Most farmers cannot leverage the benefits of economies of scale as they hold less than two hectares of land," the report states. "The arable plot size decreases with each successive generation to the point where these lands eventually become economically unviable."

"Marginal and small holdings constitute 80% of total holdings and operate on 44% of the total operational area. In contrast, semi-medium, medium and large holdings account for 20% of the total holdings and their operational land holding is 56% of the entire operating
area. This scenario emphasises the growing pressure on rapidly shrinking land holdings," the report cautioned.

Other areas of concern 

The report flags poor urban mobility, duplication of functions by state departments and parastatals, low enrolment in education, inadequate transport services and infrastructure in rural areas and the concentration of public services and employment opportunities around Bengaluru as the main challenges in front of Karnataka. 

The report specifically warns that traffic congestion in Bengaluru could deter investors and "could be a major concern for the government".

It recommends levying a congestion charge on approximately 12 million vehicles entering the city daily from nine entry points: Ballari Road, Tumakuru Road, Magadi Road, Mysuru Road, Kanakapura Road, Bannerghatta Road, Hosur Road, Old Madras Road and Old Airport Road. 

There are "numerous constraints" on ease and cost of doing business in Karnataka, the report states. "Property taxes charged by the state for industrial establishments have increased by 200%, which is a red flag for businesses", is one of them. 

The report also asks the government to increase formal jobs by paying an employer Rs 2,000-3,000 for every employment as an incentive in 10 underprivileged districts.