Karnataka, which has traditionally been one of the growth leaders in the country, has fallen behind in 2007-08. It has registered a lower rate of growth in its gross state domestic product (GSDP) compared to the national average.

According to the state economic survey for 2007-08 released last week by the planning, programme monitoring and statistics department, Karnataka logged a 7 per cent growth in its GSDP as against the national advance estimates of 8.7 per cent.

In the process the report has sprung a few surprises. The performance of secondary and tertiary sectors (comprising industry and services) has turned out to be a major disappointment unlike the agriculture sector, which has fared better.

Though Karnataka is one of the top five industrialised states in the country, the secondary sector's contribution to the growth in the state's income has been a mere 5.1 per cent, compared to the national figure of 9.4 per cent.

Similar is the case of the tertiary sector. In a state considered the home of the software industry, this sector has grown 8.7 per cent, compared to the national growth rate of 10.7 per cent.

A causative factor for the lower industry growth has been the decline in power production by 3.1 per cent (up to December 2007). While power generated from hydel sources decreased 3.3 per cent, thermal power generation declined 3.6 per cent.

However, the state has been partially saved by good rains. The rate of growth clocked by the primary sector was 4.3 per cent, compared to the national average of 2.6 per cent.

The state's rural population is 66 per cent (it is 72 per cent at the national level) and of that, 55.60 per cent has been classified as agricultural labourers.

A good spell of rains ensured that the total coverage under kharif crops was 7.43 million hectares in 2007, exceeding the target of 7.39 million hectares. As a result, foodgrain production touched 11.7 million metric tons in 2007-08.

Inflation was more or less the same as that of the country. The rate of inflation measured in terms of consumer price index (CPI) for industrial workers, non-manual employees and agricultural labourers was 3.8 per cent, 3.5 per cent and 6.7 per cent respectively during March -October 2007 as compared to 5.62 per cent, 55 per cent and 6.21 per cent over the corresponding period in 2006.

Compared to the national price indices, the rate of inflation in Karnataka was higher only with regard to agricultural labourers.

On the composition of the state's workforce, the report contended that the number of people dependent on the primary sector has declined from 67.3 per cent in 2000 to 58.4 per cent in 2005.

On the other hand, employment in the secondary sector has increased from 12.8 per cent to 16.1 per cent and that of tertiary sector from 19.9 per cent to 25 per cent during the same period.

So more people are moving to manufacturing and services but these activities have grown by less than the national average. This will lessen the higher income that migration from agriculture would have produced.