Foreword

It has been a privilege to chair the Sustainable Development Goal (SDG) 8 Committee constituted by the Government of Karnataka to draw up a broad approach to the implementation of SDG 8 ‘Decent work and economic growth’. The broad macro-economic model set out in this report, emphasises the importance of a disaggregated approach to addressing the varying problems and different trajectories of development that the regions of Karnataka represent. The community is at the heart of development praxis, and therefore the report underlines the importance of evidence to understand what happens to communities within communities, why and how. It also raises uncomfortable questions: Why, despite significant economic growth and apparent all-round progress, for a significant population in the state the sum of freedom has not increased. The minimum freedom that they need today – from the poverty of health and education – and the greater freedom they need tomorrow - of economic and social opportunities - not of a unique kind but identical with at least the middle class, if not the rich. If that aspiration was to be fulfilled, we decided, it was important to understand the patterns of development in the state.

I must place on record the contribution of the members of the committee, in particular the intellectual breadth and depth that Dr Narender Pani brought to the deliberations. Dr Pani also oversaw the writing of the report by Priyanka Agarwal and Sumedha Bajar. I must acknowledge the contributions of Dr Chaya Degaonkar and Amlan Aditya Biswas in crystallising the final set of recommendations. The team from Public Affairs Centre comprising Dr Asha Subramanian and Mohana Preethi Attaluri, provide invaluable data analytics support.

It is our privilege to present in this report, a broad implementation framework for SDG 8. The conceptual basis for an action plan seeking to achieve the twin objectives – decent work and economic growth - is challenging and by its very nature, imprecise. We recognise that the data, the analysis of the data, and the macro-economic approach proposed for the state will likely be received with circumspection by subject matter specialists and those in government alike. But I would urge you to read it fully, for it has its surprises and rewards. Among them is the realisation that there are scarcely any growth centres in the state outside of greater Bangalore and the opportunities for decent work and therefrom progress on the most urgent goals of development – education, health, livelihoods – is sub-optimal in parts of the state. The report also points to growth opportunities in the state, where encouraging growth indicators have been recorded. Development is organic by nature, therefore understanding primary growth drivers - labour, capital, or natural resources - as unique to a geography is essential; and the development praxis response context-specific and resource sensitive. This in sum is the approach to SDG 8 that the report commends.

To do this, data-analytics based decision making must constitute the central principle; and use-case applications of data science mainstreamed as a policy priority on a government-wide basis. There is much work to be done on the production and use of public data, by the state government. This report must be read in the wider context of the need to establish a scientific, sustainable and reliable model for developing data science-based frameworks that can support progressive development praxis. The Committee would be happy to continue working with the Department of Planning, Programme Monitoring and Statistics to help implement pilot projects based on the recommendations made in this report.

G. Gurucharan Chair – SDG 8 Committee September 2019

Executive Summary

The Sustainable Development Goal (SDG) 8 envisages targets relating to decent work and economic growth. This in itself poses a significant challenge - of building synergies - and addressing the varying problems and development challenges emerging in different parts of the state.

Karnataka’s growth has over the last three decades been mostly above the national growth rate Projections based on current trends suggest that Karnataka will achieve GSDP growth rates of 6.43 percent in 2022 and 5.23 percent in 2030. However, this growth is highly skewed to the disadvantage of several regions of the state, especially the Northern Karnataka districts; and is excessively, indeed solely, dependent on the economic growth produced by Greater Bangalore.

To achieve the targets of decent work and a secular, equitable, and geographically-even growth under SDG 8, the committee recommends aspirational growth targets that the state must strive to achieve:

• A GSDP growth rate target of 9 percent in 2022 • GSDP growth rate of 10 percent in 2030.

This will need dis-aggregated growth strategies that are geography and context-specific and resource sensitive.

In setting decent work targets, the principle of zero tolerance in relation to setting Rights related targets will require the state to achieve:

• Reduction to 0 by 2022 in Manual scavenging, and cases of forced labour • 100 percent coverage of Workers under social protection schemes and Households with bank accounts • Aspirational targets for services - ATMs per lakh population (calculated taluk wise) of 24 in 2017 to 35 in 2022 and 51 in 2030.

Some targets, explained in greater detail in the report, could not be set due to paucity of data. The areas where there is an urgent need for scientific and systematic data capture include:

• Growth of organised workforce in non- agricultural sectors • Annual growth of registered micro, small and medium size enterprises • Turnover of registered MSME • Employment and Unemployment rates • Workforce Participation Ratio • Wages earned by men and women • Share of unemployed persons in the population aged between 15 and 35 years • Proportion of youth (15-35 years) not in education, employment or training (NEET)

The challenge to a secular, equitable, and sustainable, growth path for Karnataka arises primarily from its excessive reliance on Bangalore - the sole growth centre – that draws away labour from other centres and attracts capital at the cost of other centres. This is exacerbated by the fact that there are no spill-over effects of Bangalore’s GSDP growth to other, even adjoining, districts except in the rise in real estate values.

This model of Bangalore centricity is no more sustainable. Bangalore’s growth is itself plateauing with the traditional technical manpower advantage weakening. Severe infrastructure constraints, not least the impending water scarcity, poor roads, traffic density, and pollution pose serious threats

to Bangalore’s future growth prospects and thus cause a further pull downwards in Karnataka’s growth.

This in turn, poses a serious challenge to inclusiveness in the state manifesting in sharp regional variations in release of work force from agriculture. In sum, there is an impending crisis at the intersection of migration, livelihoods, and urbanisation in Karnataka, challenging productivity inclusiveness in the state. Data points to the following:

• Southern region: Most districts with workers moving out of agriculture amounting to 10 percent of workforce in 2011, resulting in a spurt in demand for non-agricultural occupations • Middle region: Most districts with workers moving out of agriculture amounting to 5 percent of workforce in 2011, with a moderate demand for non-agricultural occupations • Northern region: All districts where there is an increase in workers in agriculture, with this providing a growth opportunity, but if not handled well can result in widespread rural distress.

From a macro-economic perspective, it is necessary for the state to identify circuits of growth that impact the local economy by creating productive employment and also enhance productivity inclusiveness by improving the total factor productivity in the primary sector. The report recommends an approach to identify:

• Growth centres as points of agglomeration – where population growth is higher than 50 percent between 2001 and 2011 • Categorise these agglomerations as - Capital led, labour led, and natural resource led • Identify Growth areas - contiguous growth centres connected by talukas with growth between 25 and 50 percent.

Data points to the concentration of such growth centre in the southern region. Only four potential growth centres emerge from the data analysed, from among the 39 Most Backward Talukas listed in the Dr Nanjundappa Committee Report.

While urging a decentralised and dis-aggregated approach and a set of interventions that best address the challenges faced by various regions in the state, the report makes a set of recommendations on interventions specific to the three categories of regions in which growth seems to be primarily capital-led, labour-led, or natural resource-led.

The report concludes that the effective implementation of these interventions would require a more thorough data base and analysis and recommends three specific surveys to gather data on the:

• Demand for employment and employment opportunities across the state • Savings and investment patterns both in the Growth areas and outside investment decisions that are currently being made in order to trace the factors that contribute to local capital moving out of the state, especially in capital deficient regions like Northern Karnataka.

Contents Chapter 1 Introduction ...... 1 Backdrop to the UN Sustainable Development Agenda 2030 ...... 1 Implementation of Challenges ...... 2 Significance of Goal 8 ...... 3 Lessons for Goal 8 from Other Countries ...... 4 Chapter 2 Setting Targets for Goal 8 ...... 7 Methodological Appendix ...... 12 Chapter 3 An Approach to Goal 8 of the SDGs ...... 13 Introduction ...... 13 ESCAP Approach ...... 13 Modified Approach ...... 14 Concept of Circuits in Economic Growth Process ...... 15 Circuits and Local Economy ...... 18 Chapter 4 Opportunities and Risks of Bengaluru-led Growth ...... 21 Chapter 5 Release of Workers from Agriculture ...... 29 Release of Workers from Agriculture ...... 31 Changes in Three Regions of Karnataka ...... 33 Methodological Appendix ...... 36 Chapter 6 Engines of Growth and Inclusiveness ...... 39 Choice of Potential Growth Centres ...... 39 Spatial Dimension ...... 45 Developing Inclusiveness ...... 48 Chapter 7 Recommendations and Roadmap ...... 50 Annexures ...... i Annexure 1 Committee Meetings and Decisions ...... i Annexure 2 Rationale for retaining/ introducing/removing the targets or indicators ...... iii Annexure 3: State Matrix for SDG 8 ...... vii Annexure 4: SDGs Dash Board ...... xvii Annexure 5: SDG 8 Implementation MIS Framework ...... xviii

Tables Table 1: Targets and indicators of Goal 8 7 Table 2: Sectoral Growth Rate Targets for 2022 and 2030 10 Table 3: Region-wise Rural Transition 34 Table 4: : Features of Potential Urban Growth Centres in Karnataka 40 Table 5: Estimates of Workers Leaving Agriculture in Districts with Potential Growth Centres 41 Table 6: Property Tax Collection in Potential Growth Centres 42 Table 7: Share of Districts with Potential Growth Centres in Karnataka’s mining income over the Period 2011 to 2017 43 Table 8: Education Levels of Main Workers in Urban Areas of Districts in which there are Potential Growth Centres 44

Table of Figures Figure 1:Trends in India's GDP and Karnataka's GSDP Growth Rates ...... 22 Figure 2: Trends in District Share of State GDP ...... 23 Figure 3: Impact of Bengaluru on Growth ...... 23 Figure 4: Circuits of Bengaluru’s Growth ...... 25 Figure 5:District Wise Cultivator-Agricultural Labour Ratio, 2001 ...... 30 Figure 6: District Wise Cultivator-Agricultural Labour Ratio, 2011 ...... 30 Figure 7:Workers Leaving Agriculture Between 2001 And 2011 As Proportion of Total Workers In 2011 ...... 32 Figure 8:Regional Classification of Karnataka (Based on Release of Workers from Agriculture) ... 33 Figure 9:Cl/Al Ratio Across Regions of Karnataka ...... 34 Figure 10:Proportion of Marginal workers in total workforce ...... 36 Figure 11: Map of Taluks According to Population Growth Between 2001 and 2011 ...... 46

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Chapter 1 Introduction Backdrop to the UN Sustainable Development Agenda 2030 This report seeks to present a macro-economic approach to the implementation of SDG 8, in Karnataka and highlight factors that potentially contribute to development in a manner that might best help the state to achieve the diverse, challenging and often conflicting targets set out under SDG 8, over the short to medium term. It will present an action plan that addresses the diverse spatial and temporal barriers and enablers to economic growth that characterise the current state of development in the state. In doing so, the effort will be to understand why the state faces the entwined crises of gross economic inequality and chronic environmental degradation, together coalescing to pose the double jeopardy for the future development of the state; and propose a set of interventions that can form the basis for achieving the SDG 8 targets in substantial measure before 2030.

The Sustainable Development Goals mark an important milestone in the global efforts at sustainability. Attempts to reconcile environment sustainability with economic growth gained momentum and were formalised at the UN Conference of Human-Environment in Stockholm in 1972 which established the concept of “environmentally sound development” or “eco-development”. Translating this objective into practical steps however proved to be a daunting task. Attempts at reconciling social sustainability with economic growth were largely rejected by governments until the 1980s when the twin environmental and social critiques merged into the narrative of economic development and leading to the concept of sustainable development. The Brundtland Report called for a “new era of economic growth – growth that is forceful and at the same time socially and environmentally sustainable”. Over time this objective came to be translated into eight specific Millennium Development Goals that were to be achieved by 2015. In September 2015 there was a broad recognition that the larger objective remained a considerable distance away, leading to the formulation of the 2019 Agenda for Sustainable Development. This expanded agenda listed 17 Sustainable Development Goals and 169 targets that are to be met over a fifteen-year period.

These goals were the result of extended consultations with civil society as well as other stakeholders, with discussions largely focused on the poorest and the most vulnerable. This process influenced the choice of goals. The concept of sustainability had come to be identified primarily with its economic, social and ecological dimensions. The nature of the discussion leading up to these goals ensured that the focus was primarily identifying and targeting the major problems in each of these dimensions. The emphasis on problem solving was evident from the very first Sustainable Development Goal, to “end poverty in all its forms everywhere”. As a corollary the second goal seeks to “end hunger, achieve food security and improved nutrition and promote sustainable agriculture”. The social dimension is more evident in the goals that seek to “ensure healthy lives and promote well-being for all ages”, to ensure “inclusive and equitable quality education and promote lifelong learning opportunities for all”, to “achieve gender equality and empower all women and girls”. Since many of these social challenges are related to living conditions, there are specific goals designed to improve these conditions. The SDGs seek to “ensure availability and sustainable management of water and sanitation for all”, to ensure “access to affordable, reliable, sustainable and modern energy for all”, and to make “cities and human settlements inclusive, safe, resilient and sustainable”. The required living conditions would in turn depend on the promotion “of sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”. To achieve

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this growth, it would be necessary to “build resilient infrastructure, promote inclusive and sustainable industrialisation and forest innovation”. The sustainability of this process would depend not just on the existence of “sustainable consumption and productive patterns”, but also meeting ecological challenges. The SDGs thus include several goals in the environmental dimension. It has a specific goal to take “urgent action to combat climate change and its impacts”. In addition, a goal is committed to “conserve and sustainably use the oceans, seas and marine resources” for sustainable development. It is also committed to “protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss”. These goals are to be achieved in a way that they meet the goal of reducing “inequality within and among countries”. As these changes would not be possible without the appropriate social conditions, there is a specific goal to “promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels”. The entire exercise would require a collective effort that is reflected in Goal 17, which seeks to “strengthen the means of implementation and revitalize the global partnership for sustainable development”. Implementation of Challenges The interlinkage of these seventeen goals is recognised in the Agenda when it argues that these seventeen goals are “integrated and indivisible”. Each of the goals in some way enables the others. This may be most widely acknowledged in the economic dimension where growth is expected to provide the resources for some of the other goals, but it should be equally obvious that these economic goals would not be achieved without the goals that ensure the creation of the appropriate social and environmental conditions for economic growth. The emphasis on the protection of the human rights of migrants is undoubtedly critically important in itself, but it also ensures the more efficient economic use of resources. It must however be recognised that the overarching UN 2030 agenda pillars of Growth, Equity, and Sustainability in themselves present inherent contradictions for development praxis. Specifically, the potential incompatibility between growth and equity holds significance in the context of the characteristics of India’s development trajectory that appear to have been reinforced in recent years. This apparent contradiction emerges especially strongly in SDG 8. It is clear that all the targets of the SDG 8 cannot be implemented in concert, nor does it lend itself to a plain vanilla model implemented across Karnataka. We therefore emphasise in our approach, set out in the next chapter, the need for a macro-economic model that will seek to point to and measure potential inconsistencies, and why it is important to shift emphasis from a linear economic growth-consumption approach to development to a disaggregated development models at the sub-state level. Such a disaggregated action plan must be geography, context, and resource specific and will constitute the fundamental premise on which the implementation and achieving the targets of SDG 8 will rest.

The very nature of the goals makes it necessarily a global initiative. Reducing inequalities between countries, meeting the challenge of climate change, and several other goals all require global initiatives. At the same time, it is quite explicit that the responsibility for achieving these global goals is that of national governments. The agenda demands follow-up and review to track the progress of the goals over the 15-year period at the national, regional and global levels whose primary responsibility falls under the governments. For such a mechanism to be meaningful governments need to be acutely aware of the effects their actions would have on global processes just as they need to understand the impact of global processes on local conditions. A strategy to pursue any of

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the SDGs must then be built on an understanding of the relationship between the local and the global.

The emphasis on problem solving in the definition of the goals also has its implications for the approach to individual goals. The SDGs have been identified in a way that allows for the targeting of specific problems that may have arisen in different parts of the world but now need global attention. In keeping with this focus on problems, the strategy for a specific goal would also begin by identifying the major challenges that prevent the implementation of a particular goal. In this report we have identified two of the major challenges in Karnataka to achieving the goal of “sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”.

The Agenda for Sustainable Development also realises the need to construct improved indicators to assist in this work, along with improving the statistical capacities in developing countries. In the absence of baseline data for several targets, the document calls upon the state government to recognise the absence of adequate data sources and the need to bridge this gap in Karnataka as well. This gap has resulted in several of the indicators for specific targets for Karnataka not being worked out in detail in this report. Significance of Goal 8 At the heart of the economic drive towards sustainability is the need to promote “sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all”, or Goal 8 of the Sustainable Development Goals. This goal is central to the larger objective of sustainability for several reasons. It is difficult to envisage a sustainable society if the economic growth that maintains it is not sustainable. Even as this goal lies primarily in the economic dimension of the SDGs, the manner in which it is implemented has clear social and environmental implications. The goal makes it clear that growth is not to be seen as an end in itself but in terms of what it does, especially ensuring decent conditions for work. There is also a macroeconomic dimension incorporated in this goal with its emphasis on full employment. In a society that is transitioning out of agriculture, the demand for full employment would imply not just high growth rates but also absorbing the labour that is being released from agriculture.

A comprehensive effort to achieve this goal would demand that it is seen from two perspectives. The first perspective would emphasise its multiple components. These components would range from efficiency related elements, such as economic productivity, to socially critical ones, like the abolition of modern slavery. Evaluating these components periodically would be essential to monitor progress under this goal. The second perspective would focus more on the question of how this goal is to be achieved, that is the strategies for generating inclusive growth. It is this latter perspective that is reflected in NITI Aayog’s view that India needs to focus on the dual aspects of urbanisation and manufacturing in order to achieve this and other goals, apart from an emphasis on innovation, particularly in the domain of education. If the first perspective focuses on the when and where of Goal 8, the second concerns itself with why growth follows a particular pattern and how that can be transformed in the direction Goal 8 of the SDGs desires.

The first perspective is reflected in the targets set by the agenda, and their corresponding indicators. These targets and their indicators cover a wide range of concerns over inclusive and sustainable economic growth. They begin with setting growth targets that are to be measured in terms of real per

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capital Gross Domestic Product. They move on to the components of this growth, ranging from labour productivity to innovations and resource efficiency. The targets then move on to economic considerations that have greater social implications, such as full employment, particularly of youth. The social dimensions get stronger with the targets covering the eradication of forced labour and the protection of migrant labour. The list of targets of Goal 8 finally moves into the domain of sector specific initiatives calling for sustainable tourism and a more inclusive financial system. The second perspective on Goal 8 focuses on the strategies that generate these indicators. The strategies for specific goals need to be consistent with each other and flow from a larger view of the Karnataka economy as a whole. In developing such a macro strategy this report fully endorses and follows the advice of Agenda 2030 to recognise the nature of local conditions in the effort to address global concerns. With the state government having to set and achieve specific targets the interventions will necessarily be based on the local dynamics of the economic, social and environmental aspects of the Sustainable Development Goals, including, and particularly, Goal 8. At the same time, it will recognise that global challenges are the result of global processes. The over strategy for Goal 8, and its target specific strategies, must then necessarily be based on thinking globally even as the government acts locally. Lessons for Goal 8 from Other Countries Even as we take local conditions into account, it is useful to note that other countries also face the challenge of acting locally to meet global objectives. And their responses point to the multidimensional nature of the interventions needed to achieve Goal 8. At the very outset there are the administrative issues that need to be addressed. In the Netherlands, responsibilities have been assigned to all the ministries concerned, with the Minister for Foreign Trade and Development Cooperation in charge of overall coordination. Other countries have taken the administrative mechanism beyond state institutions. The national statistical bureau of. i.e. Statistic Denmark, has been given the mandate to monitor the implementation and realization of the Sustainable Development Goals in Denmark and thereby provide data on UN’s 232 global indicators to the UN global monitoring mechanism. To do this, Statistic Denmark has invited every interested actor to join a statistic and monitoring partnership on the SDGs to gain expert knowledge on the data needed to be delivered to measure the indicators as well as expert knowledge on the quality on the data. The participants in the partnership are civil society organisations, private sector representatives, municipalities, representatives of Danish academia and several others.1 The Estonian Coalition for Sustainable Development unites nongovernmental organisations, private sector enterprises and state institutions in order to support the 2030 Agenda for Sustainable Development. The goals of the Coalition include rising awareness on sustainable development, give input for policy makers, contribute to monitoring developments and enhance cooperation.2 The extension of the SDG implementation process to include organisations that are outside government has not always been a smooth process. In Latvia many Civil Society Organisations including the CONCORD member LAPAS (Latvian Platform for Development Cooperation) have worked actively on the 2030 Agenda for Sustainable Development for years, but the government process remained closed to them. When it was decided that Latvia will submit the Voluntary National Reviews (VNR) in 2018 the LAPAS with members worked actively to engage politicians and the support of the Parliamentary Committee on Sustainable Development was received. This opened the process to NGOs that were then included in the non-formal group drafting VNR. Active work of LAPAS was

1 CONCORD: European NGO Confederation for Relief an Development, 2018, SDGs Implementation: Good Practices from Across Europe 2 Ibid

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recognised by the government and representative of LAPAS was included in the official delegation to The High-Level Political Forum.3 Several nations have also found it necessary to introduce reforms to address SDGs. The Netherlands is strengthening legislation to enhance employment opportunities, improve relations between employers and employees, and support access to financial services. In pursuit of Goal 8, a legal framework has been created in the Netherlands, which applies to all employees in all sectors, regardless of background, gender or other status, that helps offer decent work for everyone. Special efforts are being made to fight youth unemployment. The Australian Human Rights Commission has investigated barriers to employment for people with disability and older Australians, making comprehensive recommendations to governments, business and employers.4 While the Australian Government is helping displaced workers transition to new employment, a number of reforms have improved productivity by promoting investment, innovation, entrepreneurship, efficient markets and a flexible regulatory environment. Initiatives include: reforms to corporate tax; investments in innovation, science, telecommunications and transport infrastructure; streamlining of business regulatory processes; and improvements to competition laws. There has also been considerable attention paid to the specific strategies needed to achieve the SDGs. The United Kingdom has devised a 4-point plan to attain the SDGs. The plan focuses on placing public finances on a sustainable footing; ensuring the stability of the macro-economic environment and financial system; increasing employment and productivity; and strengthening the treasury.5 The emphasis on strategy is also reflected in the efforts of governments to continuously review existing sustainability strategies. The Austrian Court of Audit (ACA) carried out an audit of the implementation of the 2030 Agenda for Sustainable Development in Austria spanning from 2016 through 2017. Among others it aimed at assessing the legal framework conditions, the national recognition of the SDGs, the responsibilities of the Federal Government, the coordination across all levels of government, the implementation plan and the monitoring of progress. The report included 25 concrete recommendations for what could be done to improve the Austrian implementation of the 2030 Agenda.6 Some governments have subjected their strategies to international review. The German government’s Sustainability Strategy (GSS) was subjected to a high-level international peer review. The strategy which was first adopted in 2002, and had since been updated regularly, was revised in 2017 to accommodate the Sustainable Development Goals. In 2018 for the third time after 2009 and 2013 a group of international former politicians, scientists and civil society representatives reviewed the strategy. The international peers chaired by Helen Clark, former head of UNDP and former New Zealand prime minister, consulted with civil society, trade unions and business in preparation of the review. Some important demands from civil society found its way into the final review document.7 In India, the NITI Aayog is mandated to coordinate the implementation of the SDG goals and is working to build synergy – horizontal and vertical – in SDG action of the relevant Ministries of the Government of India as well as partnering the states. The Ministry of Statistics and Programme Implementation has drafted the National Indicator Framework to measure the progress in achieving the SDG targets.

3 Ibid 4 United Nations High-Level Political Forum on Sustainable Development, 2018, Report on the Implementation of the Sustainable Development Goals – Australia

5 HM Treasury Single Departmental Plan, 2018, Home Ministry, United Kingdoms 6 Ibid 7 Ibid

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Recognising the importance accorded by the Government of India to achieving SDGs, NITI Aayog has more recently developed a composite index that helps measure the progress on implementing the SDGs and would serve as an advocacy tool and trigger action at the State level. NITI Aayog has constructed the SDG India Index spanning 13 of the 17 SDGs. However, the Index has its limitations. It tracks the progress of all the States and UTs on a set of 62 Priority Indicators, measuring the progress on the outcomes only of the interventions and schemes of the Government of India. The states in whose domain the vast majority of the SDG fall under the constitutional scheme will therefore need a clear vision, operational strategy, and an action plan that will help them achieve the SDG targets. The international experience, together with our reading of the Sustainable Development Goals, suggests a need for a broad-based strategy for Goal 8 leading to very specific actions. This report provides the road-map for Karnataka in its endeavour to achieve the targets under SDG 8. To this end this report moves on in Chapter 2 to present the specific targets for Goal 8 as worked out by the committee after extensive discussion with a group of experts. It then outlines, in Chapter 3, a macro- economic approach to Goal 8. This approach is then taken in to the Karnataka economy, pointing to the criticality of the two major challenges facing the objective of inclusive growth in Karnataka. Chapter 4 looks at the problem of excessive economic dependence on Bengaluru, and Chapter 5 at the serious, but underexplored, problem of lakhs of workers leaving agriculture. These challenges lead us to identify, in Chapter 6, if in a somewhat preliminary way, other potential growth centres. Based on this analysis the Committee arrived at a set of recommendations which are presented in Chapter 7.

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Chapter 2 Setting Targets for Goal 8 The targets and indicators for Goal 8 were developed by the Committee based on extensive consultations with the expert group. They cover growth with decent work and employment, full coverage of benefits and financial access. In determining the key targets for SDG 8 to be achieved by Karnataka by 2030 the Committee also kept in mind Karnataka’s historical role as a leading state in providing inclusive growth. This contributed to several of the targets being aspirational, requiring appropriate budgetary allocations by the State Government. Taken together the targets involve both trade-offs and synergies, demanding an integrated approach by the state government to maximize synergies and make the most efficient trade-offs. As can be seen in Table 1, the SDG 8 targets are wide-ranging and have multiple objectives. In the interests of clarity and effectiveness, these targets have been divided into three categories: those concerned with growth, those concerned with rights, and those which face serious data gaps. The SDG Baseline (keeping 2016 as the base year) is prepared at the National level and hence, the committee suggested the same be followed for the state as well. Table 1: Targets and indicators of Goal 8

Targets Indicators

8.1 Sustain per capita economic growth in 8.1.1 Annual growth rate of real GDP accordance with national circumstances and, per capita in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries

8.2 Achieve higher levels of economic 8.2.1 Annual growth rate of real GDP productivity through diversification, per employed person technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors

8.3 Promote development-oriented policies that 8.3.1 Proportion of informal support productive activities, decent job employment in non-agriculture creation, entrepreneurship, creativity and employment, by sex innovation, and encourage the formalization and growth of micro-, small- and medium- sized enterprises, including through access to financial services

8.4 Improve progressively, through 2030, global 8.4.1 Material footprint, material resource efficiency in consumption and footprint per capita, and material production and endeavour to decouple footprint per GDP economic growth from environmental 8.4.2 degradation, in accordance with the 10-year Domestic material consumption, framework of programmes on sustainable domestic material consumption

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consumption and production, with developed per capita, and domestic material countries taking the lead consumption per GDP

8.5 By 2030, achieve full and productive 8.5.1 Average hourly earnings of employment and decent work for all women female and male employees, by and men, including for young people and occupation, age and persons with persons with disabilities, and equal pay for 8.5.2 disabilities work of equal value Unemployment rate, by sex, age and persons with disabilities

8.6 By 2020, substantially reduce the proportion 8.6.1 Proportion of youth (aged 15-24 of youth not in employment, education or years) not in education, training employment or training

8.7 Take immediate and effective measures to 8.7.1 Proportion and number of eradicate forced labour, end modern slavery children aged 5-17 years engaged and human trafficking and secure the in child labour, by sex and age prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms

8.8 Protect labour rights and promote safe and 8.8.1 Frequency rates of fatal and non- secure working environments for all workers, fatal occupational injuries, by sex including migrant workers, in particular and migrant status women migrants, and those in precarious employment Increase in national compliance 8.8.2 of labour rights (freedom of association and collective bargaining) based on International Labour Organisation (ILO) textual sources and national legislation, by sex and migrant status

8.9 By 2030, devise and implement policies to 8.9.1 Tourism direct GDP as a promote sustainable tourism that creates jobs proportion of total GDP and in and promotes local culture and products growth rate

8.9.2 Number of jobs in tourism industries as a proportion of total jobs and growth rate of jobs, by sex

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8.10 Strengthen the capacity of domestic financial 8.10.1 Number of commercial bank institutions to encourage and expand access branches and automated teller to banking, insurance and financial services machines (ATMs) per 100,000 for all adults

8.10.2 Proportion of adults (15 years and older) with an account at a bank or other financial institution or with a mobile-money-service provider

8.A Increase Aid for Trade support for developing 8.A.1 Aid for Trade commitments and countries, in particular least developed disbursements countries, including through the Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries

8.B By 2020, develop and operationalise a global 8.B.1 Total government spending in strategy for youth employment and social protection and implement the Global Jobs Pact of the employment programmes as a International Labour Organisation proportion of the national budgets and GDP

Source: Sustainable Development Goals Knowledge Forum, accessed from https://sustainabledevelopment.un.org/sdg8 on 17th June 2019. Category 1 The objectives of the targets in Category 1 relate to the growth of the economy. Target 8.1 calls for Karnataka to “Sustain per capita economic growth in accordance with national circumstances” and to “Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors”. In identifying these targets, the committee kept in mind the need for Karnataka to retain its historical leadership role in inclusive growth. After extensive discussions the Committee set a target of 9 percent growth for 2022 going up to 10 percent for 2030. In order to put these targets into perspective this report estimated where the state would be if current patterns continued. These discussions were based on trends derived from existing data by generating the equations that best fit the data (Details of the methodology are presented in the Methodological annexure at the end of the chapter). Using this method, the growth rate we estimate, if current trends continue unchanged, would be 6.43 percent in 2022 and 5.23 percent in 2030. There is therefore a considerable gap between what current patterns can generate and what is needed. What is more the current trends suggest a tendency to slow down with the estimated growth in 2030 being less than that for 2022. What is more, as can be seen in Table 2, the declining trend can be seen at the

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Report of the SDG 8 Committee sectoral level as well. If current trends continue 18 of the 21 sectors will see a lower annual growth rate in 2030 than in 2022. There is thus an urgent need to develop an effective strategy to step up growth to the levels that will be needed to achieve the targets. Table 2: Sectoral Growth Rate Targets for 2022 and 2030

No SECTOR Growth Rate 2022 Growth Rate 2030

1 Real estate Ownership of Dwellings and 10.53 7.83 Professional Services

2 Manufacturing 10.03 8.05

3 Trade and Repair Services 10.17 8.15

4 Other Services 10.77 8.39

5 Financial Services 5.38 3.39

6 Road Transport 7.99 6.23

7 Public Administration 9.82 8.14

8 Livestock 7.33 6.89

9 Communication 6.26 4.43

10 Air Transport 9.36 5.65

11 Railways 1.85 -0.82

12 Hotel and Restaurants 10.34 9.09

13 Storage 2.81 2.74

14 Water Transport 17.62 12.99

15 Fishing 8.69 8.06

16 Services Incidental to Transport 12.92 9.99

17 Forestry and Logging 1.48 4.44

18 Electricity, Gas, Water supply and 2.01 0.85 Remediation Services

19 Mining and Quarrying 6.11 4.09

20 Construction 4.65 5.03

21 Crops 3.33 4.7

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The target growth rates require a break from the past in two ways. First, the growth targets have been set at levels that are substantially above the levels achieved in the post-Liberalisation years. And, second, the target rates expect growth rates to increase over time while the projected rate for 2030, going by current trends, is lower in that year than in 2022. That is to say, Karnataka’s economy has grown to a point where additional growth becomes more, and not less, difficult. The targets are however based on the assumption that Karnataka in the 2020s will be in a stage of increasing rates of growth, with the 2030 growth rate being higher than that of 2022. The target of high and increasing growth rates are clearly aspirational. They will not be achieved by merely extending existing trends. They require a strategy that will bring about a substantial increase in Total Factor Productivity. Category 2 This category consists of the targets in Goal 8 that are designed to protect basic human rights. Given the non-negotiable character of these issues the Committee was of the view that there should be no tolerance of abusive and inhuman practices thereby ensuring decent work for all. The targets set for the removal of these practices were thus set at 0 for 2022 and 2030. This had a direct impact on target 8.7 which called for “immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms”. The committee decided that the number of reported cases of manual scavenging or death should be brought down from 3 in 2017 to 0 in 2022 and 2030. Similarly, the number of reported cases of forced human trafficking had to be brought down from 214 in 2017 to 0 in 2022 and 2030. The flip side of removing unacceptable practices is to ensure universal coverage of the efforts to protect the rights of individuals. Target 8.8 seeks to “Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment”. A target has now been set to ensure the proportion of workers covered under Social Protection schemes and Acts must be 100 percent by 2022 and 2030. In the same vein, Target 8.10 seeks to “Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all”. The Committee has set a target of raising the percentage of households with a Bank account from 99.99 percent in 2017 to 100 percent in 2022 and 2030. It has also set a target for increasing the access to ATMs. Keeping in mind the fact that it is not just the number of ATMs that is important but also their dispersal, a target had been set to raise the number of ATMs per lakh population from 24.37 in 2017 to 35 in 2022 and 50.95 in 2030. In order to ensure their dispersal this indicator was to be calculated at the taluk level. Category 3: The third category of targets are those that face an unsurmountable methodological barrier due to the absence of adequate data. There is a serious paucity of data related to several indicators in three targets, making evidence-based policy making difficult if not impossible. Target 8.3 calls for the promotion of “development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services.” The creation of meaningful targets is impaired by data deficits on the growth of organized workforce in non- agricultural sectors, the annual growth of registered micro, small and medium size enterprises, and the increase in turnover of registered MSME.

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Another target that is constrained by the lack of data is to “achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value” by 2030”. Setting this target has proved to be difficult due to the inadequacy of data on the Unemployment Rate, the Workforce Participation Ratio, and Wages earned by men and women in employment. The data constraint also affects Target 8.6 – “By 2020, substantially reduce the proportion of youth not in employment, education or training”. Setting this target has been impaired by the inadequacy of data on the share of unemployed persons in the population aged between 15 and 35 years. There is also inadequate data on the proportion of youth (15-35 years) not in education, employment or training (NEET). The committee suggested that the state should conduct a regular labour force survey to generate reliable, frequent, and measurable data to monitor progress for the above indicators. For the unemployment rate, the state has set the target as 12 percent for 2022 and 10 percent for 2030 but the committee was of the view that target cannot be set for the said indicator unless reliable data is generated. The committee also suggested that the state should carry out a MSME survey to capture the actual growth of MSME and not just the growth in their registrations. Beyond the deliberations of the committee, NITI Aayog had also identified priority indicators that Karnataka would need to follow in order to keep in line with national priorities. These priority indicators were the Annual Growth Rate of GDP (PPP Per Capita), Annual Growth Rate of Manufacturing, Agriculture & MSME sector, Unemployment & Work Force Participation Rate (Male and Female), and access to bank accounts & banking outlets. Even as the Committee endorsed the same priorities it noted the challenges it faced. This made it imperative to develop a meaningful framework to understand the economic dynamics of the state and the policy responses needed to address these challenges. The committee recognised that this called for the development of a fresh approach to the state’s economic challenges.

Methodological Appendix The estimates for each sector are based on the equation in the form ax^2 +bx + c. This equation was arrived at by fitting a series of equations, both linear and non-linear, to the data. The chosen equation had the best fit. The targets were estimated by replacing x in the above equation with the target year, for example 2022. The growth for any year is given by the slope of the curve at that point, from which the annual growth rates were calculated. The data available for time series analysis were as follows: I. GSDP data for agriculture, industry and services (from 1981 till 2019) II. GSDP fluctuations across all 21 categories that are bucketed into above three sectors (from 2011 till 2019) III. Labour intensity data for all the categories (2011-12).

Keeping in mind the structural transformation in the Indian economy in 1991 the long-term trends for GSDP were fitted for data from that year onwards. In other cases, all the available data was used.

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Chapter 3 An Approach to Goal 8 of the SDGs

Introduction This report seeks to provide an actionable road map to achieve the twin objectives of SDG 8 – economic growth, and decent work for all. The approach that we take is based on the empirical argument that Karnataka, from a macro-economic perspective, faces two fundamental problems: (a) in the last couple of decades, Bangalore has emerged as the only growth centre in the state, often devouring the resources and the potential of other alternative centres; and (b) significant number of people are migrating out of agriculture to the non-farm sector as a livelihood adaptation strategy but not finding sustainable alternative livelihood opportunities. This chapter sets out the macro-economic approach that the road map for action proposes to achieve SDG 8 in substantial measure. In setting out to “achieving sustainable development in its three dimensions—economic, social and environmental—in a balanced and integrated manner” the 2030 Agenda recognises the need to take into account local realities. The approach to the achievement of the 17 goals would ideally be one that builds on local processes, enhancing the SDG friendly aspects of those processes even as it tempers the processes that work against the goals. It is widely recognised that the integration of these processes will necessarily involve trade-offs, as when an increase in growth has environmental costs. The goals would then have to be integrated in a way that the pursuit of one goal does not lead to unacceptable costs in another. This task is made more difficult by the fact that these costs are not always anticipated. The actions in pursuit of one goal could have unintended adverse consequences on another.

ESCAP Approach In pursuing this challenging task there is much to be learnt from the framework and tools set out by ESCAP. As that organisation acknowledges, the framework is not complete but it offers specific elements to build an approach to the Sustainable Development Goals that is sensitive to the specific conditions that a geography, in this case Karnataka, faces. A major contribution of the ESCAP framework is its emphasis on the role of multiple capitals, particularly the non-financial assets and investments. The framework builds on an existing fourfold classification,8 consisting of economic capital, human capital, social capital, and natural capital, and goes on to point to a wider set of capitals ranging from different forms of the material to the human. Important as it is to recognise these different types of assets and investments, it is not without its limitations as a classification. It separates the assets and investment aspect of each element from its other dimensions. While it is undoubtedly important to recognise the asset and investment aspect of labour, for instance, it may not be very useful to separate it from the other aspects of labour. As the experiments in skill development have shown us, it may not be effective to try to develop the asset and investment aspects of labour if it is separated from the other aspects of this resource. A skill development centre for people living in their natural habitat in a forest may appear to be a positive step towards making them less dependent on the forest, hence helping them meet the twin goals of growth and protection of the environment. But if those living in the forest do not find it necessary to enhance the asset and investment aspects of their lives, they would have no reason to make use of the skill development centre. In more general terms, setting up skill development centres at points where they cannot be accessed by the labour

8 Radej, B., (2006). Assessment of Structural Funds. Effectiveness on Sustainable Development – Pomurje Regional Case Study. Final report, November. 6th Framework Programme; Framework project SRDTOOLS: Regional Sustainability Appraisal: Developing Evaluation Methods and Sustainable Policies (Contract SCS8- CT-2004-502485), Murska Sobota: Regionalna razvojna agencija Mura.

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that needs to develop its skills will not be very productive. It would thus be more useful to recognise the multiple dimensions of each input into the process, rather than focusing on its asset and investment aspects alone. In our approach we will be looking at each resource in its totality, including its assets, investments, and other dimensions. In putting together this comprehensive picture, the ESCAP framework is also sensitive to the trade- offs and synergies between the different SDG goals. It emphasises the need for scenario thinking in order to deal with the complexity and uncertainty, engaging the perspectives of multiple stakeholders and helping stakeholder thinking, confirming quantitative patterns, and helping build an effective narrative. The developers of the framework are aware that such a qualitative approach comes with its limitations. In addition to the possibility of their being time and resource intensive, there is also the risk of speculative analysis, making the method dependent on the skills of individual researchers. In the process some of the less insightful efforts at scenario thinking may lead to no more than suggesting links between scenario related activities and the development process that may be tenuous. The ESCAP framework addresses this methodological risk by suggesting a simultaneous quantitative exercise, consisting of an input-output analysis. The case for mixing methods is well taken, as neither qualitative analysis alone or relying entirely on quantitative data provides us a comprehensive picture of the processes involved in the integration of the economic, social and environmental dimensions of sustainable development. These processes have local innovations, especially in their details, that can escape quantitative methods. There may be traditional approaches to protecting the environment that are not quite on the radar of quantitative analysis. At the same time, we can never be certain just how representative an insight gained from qualitative analysis is. It is always possible that the most insightful result of a qualitative analysis is an exception rather than a rule. There is thus a need to put together a method that uses both quantitative and qualitative exercises without pitting them against each other; a method that integrates both quantitative and qualitative thinking to address a particular issue.

Modified Approach In developing such an alternative method some of Gandhi’s ideas may not be entirely irrelevant. It is conventional to treat Gandhi’s insights into the significance of the environment, well before it became a part of mainstream thinking in the West, as one of those exceptional aspects of an idealistic man. But a more reasoned study of his method, conducted elsewhere,9 suggests that it is better equipped to notice, and deal with, environmental issues. The comprehensiveness of the Gandhian method is drawn not from the creation of a grand all-explaining theory, but from a focus on actions. Gandhi saw reality as a set of interconnected actions. Each action had then to be evaluated in terms of all its potential consequences, irrespective of the domain in which they could occur. Gandhi took a particularly broad view of the consequences to be considered, ranging from the material to the spiritual. Even if one does not consider the entire range of elements that Gandhi would have considered, there is clearly a place for the economic, the social and the environmental in this approach. The other strength of this approach is to emphasise local action that is context-specific and resource sensitive as a response to what might be a global challenge. The success of local mitigation action depends on community agency – the ability to mediate the incentives for individual and collective action. A key effort must be to enable community-based institutions in segueing the impact of external interventions into adaptive and sustainable community practices as integral to long term sustainability.

9 See Narendar Pani, Inclusive Economics: Gandhian method and contemporary policy, Sage 2001

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The formulation of a set of potential consequences of an action would appear to be consistent with the broad understanding of ESCAP’s idea of scenario building, but the focus on specific actions rather than the overall system would introduce at least three changes: First, the need for comprehensiveness would not be confined to the consequences of an action but would begin with the components of the action itself. In identifying the specific concept of an action, we can, following Gandhi, borrow from a conception that divided an action into the urge to act, and the carrying out of the action. The urge to act in turn consists of knowledge, including the interpretations and preferences of the person who has that knowledge, all contributing to the choice of knowledge for a particular action. The carrying out of an action involves the means for carrying out that action, the actual process of implementation, and the inclinations of the person who carries out the action. The role of knowledge is then not confined to the analysis of an action but would also include what is known by the person who carries out an action. The knowledge that goes into prompting a particular action would be as important as the knowledge that is gained from analysing an action. The knowledge that is needed for sustainability would include both the analysis of the causes and consequences of particular actions as well as the ideas that prompt individuals to carry out sustainable or unsustainable practices. A successful intervention for sustainability would then also include measures to alter the consciousness of people in a way that enhances sustainability. Second, the focus on specific actions makes the context situational. The consequences are necessarily influenced by the specific context in which the action takes place. Thus, even as the scenario that is built includes all the possible influences on, and consequences of, an action, there is an explicit recognition that as the context changes so would the scenario. This continuous change ensures that the focus is on the process rather than a specific system. A meaningful intervention would then need to be justified on the basis of all the consequences of the action, including those which may be adverse. There would also need to be sensitivity to the possibility of unintended actions. Third, the study of a process with all its influences and consequences brings out the possibility that all the causes and consequences of an action need not be confined to administrative boundaries. The processes of globalisation encourage individuals, groups and businesses to actively explore activities across national boundaries. Equally, a particular activity rarely encompasses the entire territory within an administrative boundary. The process could then have very different consequences for those who are a part of it and those who are not. This would create a divergence between the requirements of an economic process and those of an administrative unit. Those involved in the process would only be interested in the growth and profitability of the process whereas those in charge of the administrative unit would be more concerned with what the process does to the administrative territory as a whole.

Concept of Circuits in Economic Growth Process The analysis of economic processes – both those that are confined within administrative territories and those that extend beyond its boundaries – can benefit from the concept of circuits that has been developed elsewhere.10 A circuit in this theoretical perspective is a circular economic flow. A manufacturing circuit would cover the entire flow through which a set of resources are transformed into a product which generates returns when it is sold in a market and these returns are reinvested into tapping more resources for the task of manufacturing. A services circuit would similarly cover the entire flow through which a set of resources are transformed into a service which generates returns when it is sold in a market and these returns are reinvested into tapping more resources for the services. Even as these circuits concern themselves with different economic activities, such as services

10 Narendar Pani, NIAS Working Paper on circuits of globalisation and their consequences for global politics (forthcoming).

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or manufacturing, each of them has its own financial circuit. A financial circuit is a circular flow of finances which enable investment in an economic activity and the payment to the various contributors to the activity, leading to returns to those who provide the initial financial investments. In practice various factors influence the nature and course of a financial circuit. At a time when there is a severe shortage of skilled labour the continuation of the circuit would depend on the availability of labour. At other times when cheaper labour options arise elsewhere a circuit could end as the financial flows are directed to tap the alternative source of labour. The various individuals and groups involved in a financial circuit can be broadly clubbed into to two groups, those who are in command and control of the financial flows and can thus decide whether the circuit should exist, and those who provide the resources that are tapped by the circuit. Dimensions of Circuits The sustainability of the processes that are operated through these circuits by looking at them separately from the lens of the economic, the social, and the environmental. The growth of the circuit can be viewed from each of these dimensions. The economic dimension of a circuit would be driven by the returns on the capital invested in the circuit. The inclusiveness of the social dimension, particularly in the context of Goal 8 of the Sustainable Development Goals, would be reflected in the employment that the circuit generates. The environmental dimension of the sustainability of the processes involved in the circuit would be reflected the use of natural resources. The term natural resources is used here in a broad sense to include not just the marketed inputs into the processes the financial circuit enables, but also the non-marketed costs, such as environmental damage. Drawing again from the paper on circuits referred to earlier, the growth of the economic, social (labour inclusiveness), and environmental (use of natural resources including damage to the environment) dimensions of the circuit can be formally captured as follows: The growth of a circuit in financial terms can be seen through the identity11

= . 𝑦𝑦 I𝑦𝑦f =𝑘𝑘 , = 𝑘𝑘 𝑦𝑦 Where𝑘𝑘 𝑣𝑣 𝑦𝑦= Increase𝑘𝑘𝑘𝑘 in the income generated by the circuit = Increase𝑦𝑦 in the capital invested in the circuit 𝑘𝑘 = Incremental income capital ratio of the circuit 𝑣𝑣From the dimension of labour, we would have = . 𝑦𝑦 If𝑦𝑦 =𝑙𝑙 , = 𝑙𝑙 𝑦𝑦 Where𝑙𝑙 𝑢𝑢 𝑦𝑦= Increase𝑘𝑘𝑘𝑘 in the income generated by the circuit = Increase𝑦𝑦 in the labour used in the circuit 𝑙𝑙 = Incremental income labour ratio of the circuit 𝑢𝑢In terms of the use of natural resources growth would be of the form

11 This equation follows the logic of the Harrod Domar model, except that it is used for a circuit rather than a national economy.

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= . 𝑦𝑦 If𝑦𝑦 =𝑟𝑟 , = 𝑦𝑦 𝑟𝑟 Where𝑟𝑟 𝑤𝑤 𝑦𝑦= Increase𝑟𝑟𝑟𝑟 in the income generated by the circuit

= Increase𝑦𝑦 in the natural resource used in the circuit 𝑟𝑟 = Incremental income-natural resource ratio of the circuit Since𝑤𝑤 all three equations provide different interpretations of the same growth, we would have = = =

𝑦𝑦It must𝑘𝑘𝑘𝑘 be clear𝑙𝑙𝑙𝑙 that𝑟𝑟𝑟𝑟 this mathematical equality does not in any way suggest the equality of the three dimensions of the processes of growth of a circuit. All that it implies is that the benefit gained from one dimension is transferred to the other dimensions. If a circuit grows by tapping natural resources at a very low cost, it will automatically increase the income that is generated per unit of labour and the income per unit of capital. The issue of sustainability is then determined not so much by this mathematical equality in itself, but in the choice of dimensions that is used to alter the growth that is achieved. Each of these dimensions would have its instrument of intervention. The capital-led dimension would have an improvement in technology leading to an increase in the incremental income-capital ratio of the circuit. The increase in income from such a technological innovation would result in a corresponding increase in the income-labour and income-natural resources ratios. Similarly, an intervention through the labour-led dimension would have a direct positive effect on the incremental income-labour ratio. And this increase in income would raise the income-capital and the income-natural resources ratio. A similar process the interventions that tap natural resources at a low cost would be reflected in a direct increase in the incremental income-natural resource ratio, and the corresponding effects of a higher income on the income-capital and the income labour ratios. Whatever be the intervention that spurs the growth of a circuit, its expansion would have both synergies and trade-offs. The viability of a financial circuit would imply that there are financial synergies between the various elements involved in it. The capital, the labour, and the natural resources used all develop synergies with each other leading to the growth of the circuit. The precise relationship between these inputs could change within a circuit. A change in technology, for one, could alter the relative use of capital, labour and natural resources. This would alter the nature of the synergies between these inputs within a circuit. But to the extent that these inputs would find a place in the circuit only if they support each other, there would be synergies between capital, labour and natural resources. It is in the relationship between circuits that the picture gets more complex with the existence of both synergies and trade-offs. Synergies can emerge in both products and processes. The development and availability of a product that is an input into another product opens up the possibility of forward linkages. This would be true not just of manufacturing products. The development of technical manpower can provide synergies with sectors that have a need for this manpower. In the realm of processes, the synergies may be less tangible but are no less critical. The work practices of the workforce tend to spill over from one unit to another. The emergence of professional work practices in one unit could turn into broad guidelines that neighbouring units could adopt. The potential for such spill over effects would increase in situations where workers tend to move from one firm to another, that is when the attrition rates are higher. The trade-offs too occur at multiple levels. At a core level there are trade-offs in the use of scarce resources. An increase in the use of a marketable resource would exert an upward pressure on its

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price. This would reduce its availability for others who can no longer afford that resource. This is particularly true of land. The takeover of large tracts of agricultural land for industrial purposes results in a direct trade-off between agriculture and industry. In addition, the increased demand for land would raise its price, often taking it beyond the reach of workers seeking to buy residential accommodation. The trade-offs in non-marketable resources may sometimes be more difficult to track. The trade-off between urban industrial growth and air pollution is typically only noticed when it reaches crisis proportions. The trade-offs can also occur in the realm of government support. State investment in infrastructure designed to attract a particular industry could be at the cost of support for other sectors. Therefore, it is important to acknowledge that economic growth is organic and must grow from the local soil, as it were. Development praxis must therefore must be disaggregated in its approach recognising the patterns of the diverse circuits in operation; and government action be designed to make interventions that are geography, sector, and resource specific in a manner that reinforces, than run counter to the economic growth processes that underlie the circuits.

Circuits and Local Economy Our focus has thus far been on the growth of the circuit as a whole. As we have noted a circuit can exist within an economy or extend across more than one economy. Each economy can then attract elements of multiple circuits. Some of these circuits would function entirely within that economy, while in other cases the economy would be home to only a part of a circuit. The income of an economy, consisting of all its earnings from multiple circuits, can then be seen to be determined by two factors: the number of circuits it attracts and the share of the earnings of a circuit that come to the economy. If i represents the circuits, 1 to n, that contribute to the earnings of an economy, and j represents the shares of the growth in earnings of each of these circuits, then yi.jj would represent the growth in the earnings of an economy from circuit i. The growth of the economy would then be: . I (i moving from 1 to n)

∑Such𝑦𝑦𝑦𝑦 𝑗𝑗a summation would cover the earnings in the economy from all the circuits that contribute to its income. In an accounting sense this would be identical to the GDP calculated through the market price route. In terms of understanding, and intervening in, an economy there would the circuit-based approach would require several changes in policy perspectives. First, it would have to see the growth of the economy as primarily a task of attracting circuits and then seeking to increase the economy’s share of earnings from that circuit. An economy can offer advantages of different types that attract a circuit to it - a source of capital that allows it to command and control a circuit; manpower with the specific skills a particular circuit needs; natural resources that a particular circuit needs to tap. Policies would need to first develop these advantages and then market them to the circuits that need them. It must be stressed that the conditions that prove attractive to the command and control decision makers of a circuit, do not always respect the administrative and political boundaries of an economy. This is typically seen in terms of a circuit’s ability and willingness to cross national boundaries. But the competition between resource centres to attract a particular circuit can exist within the administrative and political boundaries of an economy. Indeed, the success of a particular resource centre in attracting global circuits may draw the circuits away from other competing resource centres within the same economy. A resource centre that gains a global reputation as a primary provider of, say technical manpower for the software industry, will have an advantage over nearby resource centres seeking to tap the same circuits. A broad-based strategy for growth would thus try to attract varied circuits with each resource centre specializing in a particular set of circuits.

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The challenge of increasing the share of a circuit that comes to a particular economy would appear to be more daunting. A circuit would be attracted to a particular economy largely, if not entirely, on the basis of the lower costs it may offer. If an economy is to increase its share in the earnings of the circuit without losing its low-cost advantage, its policies would need to meet two connected objectives. It could begin by making up with numbers what it compromises in costs. It could offer low nominal wages for individual workers, but gain by increasing the number of persons employed. Such a strategy may be acceptable to workers who are in distress, but may be less attractive to them when their condition improves. As the condition of labour improves, workers are bound to seek a higher wage thereby eating into the low-cost advantage. Policy measures could be designed to overcome this pressure by recognizing that while those in control of a circuit would only be interested in nominal wages (or what they have to actually pay out), workers would be interested in real wages. Any improvement in their living conditions through, say state supported housing, would enable them to work for relatively lower nominal wages. Second, in line with the emphasis on the economic, social and environmental dimensions of the Sustainable Development Goals, the circuits also have their economic, social and environmental dimensions. The working of a circuit would use economic resources and have economic consequences; it would tap social processes and in turn affect them, and it would use natural resources, including in ways that influence the quality of the environment. A detailed analysis of the impact of a circuit in the economic, social and environmental dimensions could throw up patterns that are specific to each of the individual SDG goals. While the specific dimension of the SDG that is the most affected could vary from goal to goal, it is important to recognise that each goal would reflect all three dimensions. It may appear that Goal 8 with its focus on decent work and economic growth would concentrate primarily on the economic dimension of the SDG. But the process of achieving economic growth has substantial social and environmental consequences. it would need to take into account the social and environmental dimensions of growth in addition to its economic dimensions. The principal challenge is to balance growth, equity, and sustainability over the medium to long term. A major part of the social dimension of growth would be determined by the levels, and types, of employment it generates. This is particularly true in an agrarian economy that is in the process of becoming non-agrarian. As millions of workers move out of agriculture, the social dimension of growth would be largely determined by whether they find gainful employment. High growth rates that are achieved without absorbing these workers in decent work can lead to the creation of an angry young group of the unemployed, a development that would have its adverse social implications. Policies that promote must then also be sensitive to the type of employment that growth generates. The challenge of inclusive development in India’s development trajectory, and equally relevant for Karnataka, is characterised by widespread underemployment and the growing temporariness of work. This is exacerbated by the fact that these informal jobs are mostly urban, largely concentrated in and around the greater Bangalore agglomeration. The environmental dimension can prove to be even more challenging. The demands for rapid growth can, and often do, result in severe environmental damage. It should be possible to develop a measure of the environmental damage caused to an economy by functioning of a circuit. This damage would include not just the immediate deterioration in environmental parameters but also the inter- generational inequality that would arise from the use of natural resources at the cost of their availability for future generations. Once such a measure is developed and is expressed in economic terms the trade-off between growth and the environment would become explicit. The explicit nature of such a trade-off would make it easier to influence the collective consciousness in a way that makes individual and group actions more sustainable. Policy interventions in this direction would emphasize an understanding noted earlier in this approach, that the task of knowledge for sustainability is not

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confined to knowing what is best for sustainability but also in enhancing the knowledge of sustainable practices in individuals and groups in a society. A case in point of such a trade-off unfolding as a crisis is the double jeopardy of over exploiting groundwater in peri-urban areas. When this approach is taken into Goal 8 of the Sustainable Development Goals it must help policy interventions that promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. In achieving this goal, it is important to remember that it would call for interventions in an already existing dynamic situation. It would need to recognise the points where the ground reality diverges from the goal and point to policies that would bring future development closer to the goal in terms of its economic, social and environmental dimensions. There are bound to be a large number of such divergences with varying degrees of significance. In our search for the divergences that have the greatest influence on growth, employment and working conditions in Karnataka, there is reason to pay particular attention to two dynamic phenomena: The concentration of circuit led non-agrarian growth in Bengaluru, and the movement of millions of workers out of agriculture in different parts of the state.

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Chapter 4 Opportunities and Risks of Bengaluru-led Growth The Greater Bangalore Metropolis is arguably better known in the world than Karnataka State and with good reason. More recently, from the dawn of the new millennium, it has acquired the appellation as the knowledge capital. In its early development, two arms held up Bangalore as a driver of economic growth and a generator of employment – Public Sector Enterprises as a result of the Government of India’s initiatives; and textiles, through a decentralised and non-mechanised ‘putting out’ system. These two arms were to later be the foundations for a paradigm shift to the private sector enterprises with high value outputs, and the transformative power of generating direct employment and supporting a clutch of support services. From a macro-perspective, this raised two questions: was this model sustainable; and can it be replicated in other geographies. In the context of this report we analyse the profound impact on the state arising from a Bangalore-led growth model. Karnataka is widely acknowledged to be among the better performing state economies in India. In the popular domain this is largely the result of its most successful industries having a very visible profile, with the information technology industry taking the lead. When we move beyond popular imagery to the hard numbers of growth rates of the Gross State Domestic Product and the national Gross Domestic Product the picture gets just a little more mixed. While the state’s GSDP growth rate has outperformed the national growth rates for much of the current decade, this has not always been the case. There have been relatively short periods in the past when the state’s economy had growth at rates that were much lower than the national average. Over the longer term these periods of shortfall are more than compensated by periods when the state has grown more rapidly than the national average. But as Chart 1 tells us, the periods when the growth rates of Karnataka’s economy diverge – in either direction – from national trends are frequent and often quite substantial. This long-term pattern would suggest that the state’s growth is often driven by factors that are different from those driving the national economy. A closer look at the points of divergence of the state’s economy from the national economy could point to the specific factors that influence, if not determine, economic growth in Karnataka. As can be seen in Chart 1, the period after Liberalisation began with Karnataka’s economy mirroring national growth patterns. The steep fall in the national growth rate in 1991-93, following the balance of payments crisis was matched by a sharp decline in the growth rate of Karnataka’s economy as well. The state’s growth rates did not diverge a great deal from the national average till 1997-98. But since then there have been years when the Karnataka economy and the national economy have moved in opposite directions. In 1998-99 the state’s economy boomed even as there was a dip in the national growth rate, and two years later when the national economy recovered Karnataka’s economy saw a decline in its growth rate. At other times the divergence has been caused by Karnataka’s growth rates exaggerating national trends. When the growth rate of the national economy dipped in 2009-10, Karnataka’s economy saw a much sharper decline in its growth rate and when the national growth rate recovered in 2011-12, Karnataka’s growth rate recovered much more sharply. While a complete explanation of these divergences calls for a level of detail that is well beyond the scope of this report, it is difficult to ignore the fact that several of these divergences have been prompted by global trends, especially in industries and services that benefitted from the information technology revolution. The Y2K challenge in the years just before the turn of the century saw a boost in demand for Bengaluru’s software industry, leading to a spurt in its growth despite there being a dip in the growth rate of the national economy. When that demand petered out in the next couple of years the software industry saw lower growth rates. This contributed to a decline in Karnataka’s growth rates at a time when the national growth rate had recovered. Again, when the full impact of the global financial crisis was felt on the Indian economy in 2009-10, it had a far greater impact on Karnataka’s growth rates.

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Trends in GDP and GSDP Growth Rates

16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 ------1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Karnataka India

Figure 1:Trends in India's GDP and Karnataka's GSDP Growth Rates Source: Planning Department, Government of Karnataka

Karnataka’s economy is thus far more sensitive to global circuits than the national economy. The points of divergence of the state’s growth rates from the national growth rates also point to the sensitivity, in particular, to the global circuits that emerged from the communication revolution. Since many of the resource points for these circuits are located in Bengaluru, the city and its urban district have been the prime beneficiaries of this growth. The influence of this growth on the state’s economy is thus also reflected in the share of Bengaluru Urban district in Karnataka’s economy. As can be seen in Chart 2, Bengaluru Urban District not only accounts for well over a third of Karnataka’s GSDP, but its share is steadily rising. The district with the next highest share, Dakshina Kannada, accounts for just a little over 5 percent of the state’s GSDP. And the extent of the concentration in Bengaluru also ensures that the spill-over of its growth into neighbouring districts is also extremely limited. The combined share of the two districts that surround Bengaluru Urban – Bengaluru Rural and Ramanagara – is just around 3 percent.

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Trends in District Share of State GDP

40 35 30 25 20 15 10 5

PERCENTAGE OF STATE GDP STATE OF PERCENTAGE 0 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Bengaluru Urban Dakshina Kannada Bengaluru Rural plus Ramanagara

Figure 2: Trends in District Share of State GDP Source: Planning Department, Government of Karnataka

It must be emphasised that the criticality of Bengaluru is not just in terms of its overwhelming share of Karnataka’s GSDP, which itself would make it a crucial factor. What is more significant is that Karnataka’s growth rate itself drops quite noticeably if we take Bengaluru urban district out of the picture, as can be seen in Chart 3. The economic dependence on Bengaluru is thus not just the result of the city dominating the state’s growth in the past, but it continues to do so today.

Impact of Bengaluru on growth 12.00

10.00

8.00

6.00

4.00

2.00

0.00 2012-13 2013-14 2014-15 2015-16 2016-17

Overall growth Growth without Bengaluru urban

Figure 3: Impact of Bengaluru on Growth Source: Planning department, Government of Karnataka

This excessive reliance on Bengaluru for Karnataka’s growth is not without its risks. It is built on the implicit belief that since the city has provided the impetus for Bengaluru’s growth over several

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decades, it can continue to do so. This picture of Bengaluru being the consistent engine of growth in Karnataka, which emerges from the GSDP data hides the quite substantial changes taking place in the city’s economy. Bengaluru’s growth in the years after Indian Independence has been the result of three quite different circuits that, sometimes fortuitously, led from one to the other. The first circuit emerged around the national public sector. The city’s experience with public sector units in the pre- independence years made it a natural destination for some of the major Central public sector units after independence. The coming of these units took the form of a number of townships on the periphery of the then Bengaluru (Nair, 2005). These well-designed townships, together with the higher wages and better labour conditions ensured by trade unions, made Bengaluru a sought-after destination for workers. The availability of a skilled workforce may well have influenced the decision of the Central government to expand public sector investment in the city. The growth of the public sector, with a unionised labour force, ensured that the nominal wages paid to its workers, as well as the facilities available, were noticeably above those of other workers, especially those in the unorganized sector. Over time the costs of these benefits, together with other factors, began to hurt the ability of the public sector to compete effectively. Several of these units sought to reduce these costs by outsourcing the manufacture of some of the components of their products to small scale private units who relied heavily on unorganized labour. The state government enabled this process by creating large industrial estates in Bengaluru.12 For some period of time this sustained a number of small and medium enterprises through contractual arrangements in a captive market, till the parent PSU and the SME together were, in the absence of global competition, overtaken by technological obsolescence. As the public sector continued to falter, the small-scale industries that were to meet the public sector’s requirements of components came under pressure. This would have adversely affected the usage of the industrial estates, but for unpredicted and favourable global trends. In the 1970s global fashions changed in a way that clothes, such as jeans, did not need the high technology and skills of the developed world. As global brands began to seek places of low-cost manufacture in the developing world, Bengaluru’s small-scale sector, with its industrial estates and low-wage unorganized labour, was an attractive location. This garment export led growth became the second circuit to become an engine of growth in the city. The third circuit was also a by-product of public sector investment and global change. The education and health facilities provided to workers in the public sector, enabled their children to tap the higher educational opportunities Bengaluru offered. This created a large body of technical manpower that the state could not always absorb. Some of this manpower found its way to become a part of global technology circuits. The communication revolution in the mid-1980s made it possible to tap this manpower in Bengaluru itself. As global players as well as new Indian companies began to utilize this manpower the city began to grow rapidly through the place it had found in the global information technology circuit. The period of time over which Bengaluru has been economically successful, as well as the extent of that success, has sometimes led to an implicit assumption that it can continue to be the engine of growth for the state as a whole. In order to evaluate this possibility, it is useful to isolate the processes involved in this growth, so as to make obvious the opportunities and risks that each of them provides. In line with the approach outlined earlier in this report, the post-Independence economic experience of Bengaluru can be seen as a set of three interconnected circuits, as depicted in Figure 4.

12 (Sudhira et al, 2007)

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Figure 4: Circuits of Bengaluru’s Growth The innermost circuit in the diagram is centred around the public sector. Investment in the public sector leads to the creation of infrastructure, which includes education and health facilities. These facilities attract more trained manpower. This in turn gives the city an edge when competing with other cities for the location of any expansion of the public sector. Over time the new infrastructure created provides the link to the city’s second circuit, that is led by the garment industries. The facilities and unorganised labour available in the industrial estates are tapped by manufacturers to provide garments to the global garment circuit. While the wages here are low when compared to international standards, they are better than what is available in the villages in neighbouring districts. In addition, the garments that exporters reject are then sold to workers and others at throwaway prices. This increases the real wage of garment workers, thereby attracting more workers. The availability of workers in turn makes the city an attractive destination for garment firms. But yet again, an inflexion point emerged in 2005. The Agreement on Textiles and Clothing, under the WTO, replaced the Multi Fibre Agreement with effect from January 1, 2005 and provided for the dismantling of the quota regime extant. In the years leading up to this significant change was the window of opportunity that was lost. The inability of garment exporters in Bangalore, and more generally in India, to embrace new technology, improve productivity, and scale-up their operations were to have severe adverse consequences on the export led garment industry. There are lessons here that need to feed any growth strategy for the future. Meanwhile, the education and health facilities provided to workers in the public sector contributes to the ability of the next generation in their families to tap the technical education institutions in the city. This provides the link to the third circuit. The availability of trained manpower makes the city an attractive destination for those seeking to benefit from the communications revolution. It attracts both global information technology majors as well as emerging Indian giants who have found a place in the global information technology circuit. This process leads to the creation of both physical and social infrastructure in the places of work of this circuit as well as in residential areas. The social norms of those working in the global information technology circuit spill over to other workers in the city.

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The availability of workers with the technical qualifications and social norms that suit the global information technology circuit, attract more firms to the city. The ICT production process that Bangalore has come to exemplify thrives in clusters of knowledge intensive exchange networks. The rise of the software and the micro-electronics industry in Bangalore and its location in the international division of labour in the production cycle best epitomises this. Less known is the organisational mechanics that permeate - the inter-firm division of labour resulting in firms specialising in specific stages of the production process – and is unique to Bangalore. Thus, the efforts of the state to replicate Bangalore’s success in other geographies in Karnataka, as a development strategy have failed, and moving forward will not be an option. This picture of interconnected circuits undoubtedly brings to the fore the specific strengths that have made Bengaluru the engine of growth that it is today. The city has been able to emerge as the centre providing labour resources with varying degrees of skills, ranging from the semi-skilled workers of the garment industry to the technical manpower of the information technology industry. Its long history of dealing with substantial migration, Bengaluru has developed its ability to be the base for the agglomeration of workers of different economic and skill levels. The global recognition of Brand Bangalore has ensured it is a place that would be considered when global circuits seek new destinations. Bengaluru thus has inherent tangible and intangible resources that can ensure it remains a major engine of growth for Karnataka. Yet the increasing reliance on the city for Karnataka’s growth which we have noted earlier, is not without its serious risks. At a rather fundamental level it is not clear that the city will continue to have the physical resources needed for its unbridled growth. The pictures that are being drawn of the availability of so basic a necessity as water are far from comforting. There are also challenges in the management of everyday life in the city. Bengaluru struggles with a traffic that causes significant delays and hence reduces the ease of operating from the city. These pressures are accentuated by those that emerge from the divergent requirements of the three circuits. In theory there is nothing to stop all three circuits that have contributed to Bengaluru’s growth from operating simultaneously, and in practice they do co-exist. But in terms of their contributions to growth the divergences in their interests are becoming quite evident. Of the three circuits the public sector led one has already faded into the background. The declining role for this sector in national policy after 1991 has in effect removed the possibility of the public sector led circuit emerging as a major driver of growth in Bengaluru. The global garment led circuit has been more resilient and has continued to grow in the city even as all attention has been drawn by the information technology led circuit. But there are several points of divergence between the interests of the two circuits; divergences that are reflected in their costs of operation. The higher-end demand for land of the information technology circuit has contributed to spiralling land prices in the city. These prices take land well out of the reach of garment workers, causing serious pressures on housing. Similar demands for high-end transportation infrastructure from the information technology circuit have also increased the cost of commuting in the city. This typically forces garment workers to walk long distances to work. And the places of residence for these workers from where they can walk to work typically offer unhygienic living conditions. As the cost of living of garment workers increase there is an upward pressure on their wages. This has already begun to make Bengaluru a less attractive resource destination for global garment brands, when compared to, say, cities like Chittagong in Bangladesh. Over time the growing dependence of Karnataka’s economy on Bengaluru has been matched by the increasing dependence of Bengaluru’s economy on the information technology circuit. This dependence on the information technology circuit brings with it, other risks. It makes the city’s growth extremely susceptible to global fluctuations. We have seen in Chart 1 that global fluctuations,

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such as the financial crisis of 2008, had a lagged effect on the information technology industry and consequently the growth of Karnataka’s economy. In addition to fluctuations in the global circuits there are also the challenges of competition with other resource centres. Changes in conditions in Bengaluru, or other competing resource centres elsewhere in the world, could result in the global circuits choosing other resource centres. These changes could be the result of initiatives taken in other cities to become more effective resource centres. The competition could also be affected by Bengaluru losing its edge in some of the advantages it provided to global circuits. The availability of technical manpower in Bengaluru was the result of consistent efforts in the domain of higher education going back to the early decades of the twentieth century, followed by the development of other engineering colleges later. Any reduction in the quality of that education would reduce the quantity of employable manpower available for global circuits. Again, the competition between resource centres is also in the realm of costs. Increases in the cost of living in Bengaluru could generate an upward pressure on nominal wages, making the city less attractive to global circuits. The competing resource centres can be from anywhere in the world, both within and outside the country. Indeed, there has been intense competition among Indian cities for a place in global circuits. The competition between Bengaluru and Hyderabad did, at one time, catch the popular imagination. Of greater significance to this report is the impact of such competition within Karnataka. When each circuit is seen in isolation, it may appear possible for other centres to compete with Bengaluru. In such a situation even if the global circuit were to decide to move out of the city there would be other urban locations in Karnataka that they could choose. But the dynamics of agglomeration works against the development such options. The existence of technical manpower in Bengaluru attracts firms which attract technical manpower from nearby locations. This prevents nearby locations from developing as a resource centre for technical manpower. A similar process can be seen in the garment circuit as well. The success of Bengaluru as a garment exporter attracted manufacturers who attracted labour from nearby areas, which in turn caused more manufacturers to set up operations in the city. As workers agglomerated in Bengaluru it reduced the scope for other nearby locations to emerge as resource centres for the garment industry. What could be considered ‘nearby’ would vary from circuit to circuit. The garment industry is known to have drawn workers from districts within a 250-kilometre radius from Bengaluru, while the information technology industry in the city has attracted workers from much further away. This process has a lesson for policy as well. Efforts to set up growth centres based on the same impulses as Bengaluru – particularly information technology and garments – within the areas that supply labour to the city would come up against the barrier of having to compete with an already established centre. What makes this competitive process particularly intense is that it alters the effectiveness of some policy instruments in encouraging local growth. Governments have for decades tried to encourage the growth of local industry by supporting local capital. This capital was expected to, and usually did, invest in the local economy. But as they grew, they were under no compulsion to be confined to the local economy. As globalisation encouraged the hypermobility of capital, the possibility of investing elsewhere became easier. It was quite possible for local capital to develop with local state support and then move to other locations. A garment manufacturer could grow in Bengaluru and then invest its surpluses in other cheaper cities. The same would be true for the information technology units that started small and then grew rapidly. Indeed, the emergence of Bengaluru as a start-up capital suggests that this process is now deeply entrenched in the city. The transformation of local capital into non-local forms can occur at multiple levels. Companies that have grown with state support in Bengaluru could become global players and focus their investments abroad. The transformation could also occur at more local levels with capital that has grown with local state support moving to neighbouring states. Investment policy would thus have to develop two clear

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strands. One strand would need to be focused on developing local capital, so that it could in the initial stages be used for local industry. This strand would ensure that there are multiple sources of capital emerging within the state. The second strand would focus on making local conditions conducive to attract investment, including that of local capital. This would ensure that the Karnataka economy can benefit from larger national and global trends. A focus on either one strand alone would be limiting. A focus on the first strand alone brings with it the possibility of state- supported accumulation of local capital growing only to be invested in other centres, including those outside the state. An emphasis on the second strand alone would leave the state’s economy completely susceptible to the vagaries of global trends. The sustainable growth demanded by Goal 8 of the Sustainable Development Goals thus calls for a strategy that reduces the dependence on Bengaluru, and by association, the global circuits that have provided its growth. While the city is, and will remain in the foreseeable future, the main growth engine for Karnataka, there are clearly risks associated with this growth that need to be addressed. There is thus a need for a two-pronged strategy for sustainable growth in Karnataka. The first prong would involve strengthening Bengaluru as a point of attraction for global circuits. This would involve at least three sets of measures. First, it would require the maintenance and growth of the advantages that made it attractive to global circuits. This would include the task of generating technical manpower of the quality that once gave Bengaluru its global image. Second, it would call for a sensitivity to costs of living in the city. Decisions for Bengaluru would need to also consider what they do to the cost of living and hence the nominal wages in the city, as these costs would determine its attractiveness to global investment. And third, it would need to be aware of the cost-effectiveness of infrastructure. Even as there is a critical need to develop infrastructure for the city, there is a need to be aware that an unbridled increase in costs could be counterproductive in terms of attracting investment. The second prong would be built around developing alternative growth centres that can tap new circuits. These growth centres cannot compete with Bengaluru, primarily because they will find it difficult to challenge an established centre. They will need, instead, to tap resources that Bengaluru does not usually have access to. The geographical spread of such resources would vary from circuit to circuit. While identifying such potential growth centres it would be necessary to remember that no location provides a completely clean slate. There are economic processes that are already occurring in those areas. The potential growth centres would need to build on the processes that already exist. These processes could be determined in the individual growth centre, or could be influenced by factors outside it. In Karnataka, as indeed in large parts of the rest of India, the processes of growth are deeply influenced by the fact of millions of workers leaving agriculture. Apart from the impact they have on the growth process, the demands of Goal 8 of the Sustainable Development Goals for inclusiveness make it imperative that we take a closer look at the magnitude of workers leaving agriculture, their regional pattern, and the implications of these trends for sustainable growth.

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Chapter 5 Release of Workers from Agriculture A macroeconomic transition is unfolding in Karnataka at the intersection of agriculture, climate change, and urbanisation, and is manifesting in large swathes of people - especially in certain geographies in the state - migrating out of agriculture. This needs to be recognised as an impending crisis because it represents livelihood adaptation measures rather than a structural transformation with most of those migrating to the non-farm sector facing double jeopardy - of declining farm incomes at the place of origin and underemployment in low wage jobs at the place of destination. The growing informality and temporariness of work that characterises the labour market has exacerbated the problem. Taken together, the goal of providing growth along with full employment is made more challenging in Karnataka. Karnataka is drought-prone with large numbers of marginal and small farmers and dominated by rain-fed agriculture and poor irrigation. Excessive and unregulated ground water exploitation combined with inappropriate cropping patterns have resulted in widespread soil stress and severe water scarcity in many parts of the state. Agricultural distress is acute in North Karnataka's semi-arid regions, and farmer suicides have been recurring. In sum, farmers and agricultural labourers need non-farm livelihood opportunities. Even as agriculture continued to dominate the state’s economy in 2011 with 47.7 percent of its main workers being either cultivators or agricultural labour, the pressures on these occupations were evident from the earnings of this sector. The share of agriculture in Karnataka’s GSDP has been on a declining trend, reaching 10.11 percent in 2018-19, without a corresponding drop in the proportion of workers in agriculture. The pressure of declining share in GSDP was thus felt by individual farmers. Their ability to absorb these pressures has hurt other long-term trends. Extensive use of chemical fertilizers has hurt the quality of their land. And the patterns of inter-generational transfers of land have not helped. Since the land is invariably divided when it passes from a father to his children, the size of the farms diminishes with some of them becoming unviable. The average size of operational holding came down from 1.74 hectares in 2000-01 to 1.55 hectares in 2010-11. This has contributed to a significant decline in the number of cultivators in Karnataka. Despite the increase in the state’s population and workforce, the absolute number of cultivators in 2011 was around two lakhs less than the number in 2001. The immediate effect of this change has been a movement away from the traditional agrarian system in the state dominated by cultivators, to one with greater numbers of agricultural labour. The changing composition of workers in agriculture in Karnataka is easily captured by the ratio of cultivators to agricultural labour, or the CL/AL ratio. This ratio in turn can provide insights into the nature of agriculture in a region. A region where the CL/AL ratio is high would suggest a preponderance of small cultivators and the possibility of small peasant agriculture. Conversely a region where the CL/AL ratio is very low would suggest an agriculture where a few cultivators hire a large number of agricultural labours to operate in a market dominated large farmer agriculture. There would of course be a variety of combinations between these two extremes, but they could be grouped in terms of whether they are closer to one form of agriculture or the other. If we take a ratio of 1 as the threshold, districts with a CL/AL ratio of greater than 1 would be characterized by a large number of small peasant cultivators, while those with a CL/AL ratio of less than 1 would be one dominated by farmers using hired labour. When seen in these terms it is clear that Karnataka has moved very significantly from an agriculture dominated by a larger number of small peasant cultivators to one that is more dependent on agricultural labour. The map in Figure 5 tells us there was only one district in 2001 – Bellary – which had a CL/AL ratio of less than 1. That is, agriculture in almost the entire state was marked by a preponderance of cultivators. By 2011 the picture had changed quite dramatically with Figure 6 telling us that 12 districts – Bidar, Chamarajanagar, Gulbarga, Gadag, Bellary, Haveri, Koppal, Bagalkot, Raichur, Dharwad, Yadgir and Bijapur – had a CL/AL ratio of less than 1.

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Figure 5:District Wise Cultivator-Agricultural Labour Ratio, 2001

Figure 6: District Wise Cultivator-Agricultural Labour Ratio, 2011

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Release of Workers from Agriculture The decline in the CL/AL ratio, coming as it does with an absolute decline in the number of cultivators between 2001 and 2011, suggests the existence of two responses to the declining viability of farms. The poorer cultivators could find themselves under pressure to become agricultural labour, a process that would not only reduce the number of cultivators but also boost the number of agricultural labour. The relatively better off cultivators may have also had the option of exploring non-farm occupations either within the village or outside it. Thus, the decline in cultivators could be the result of both - many of them being forced into agricultural labour as well as some of them moving out of agriculture. The rising number of agricultural labour may suggest that they do not have too many options outside agriculture. But they too could be under pressure to leave agriculture. Cultivators who choose not to cultivate in years when farming is unviable for them would leave their land fallow. This would reduce the demand, and employment opportunities, for agricultural labour. This movement out of agriculture could well have been masked by the general increase in population between 2001 and 2011. A meaningful comparison over time would thus require us to adjust for the natural increase in the population. This has been done by calculating the rate of natural increase of population for the 30 districts in Karnataka. This allows us to estimate the picture that would emerge if there was no change other than that caused by the natural rate of increase alone. When we compare the actual picture with these estimates, we get the change that has occurred after adjusting for the natural rate of increase. The detailed methodology is presented in the methodological appendix. The difference between the actual number of main workers in agriculture – cultivators and agriculture labour – and the estimated number of main workers in agriculture taking into account the natural rate of increase, demonstrated a clear movement out of agriculture. As can be seen in the map in Figure 7, out of the 30 districts in Karnataka, in 24 districts the number of main workers in agriculture in the Census year 2011 were less than what would have been suggested by the rate of natural increase. This implies workers left agriculture in search of work elsewhere. These 24 districts also varied in their intensity of release of workers from agriculture. There were districts like Udupi, Tumkur, Bengaluru Rural, Mandya, Chikkaballapur, Mysore, and Hassan where the release of workers from main agriculture was more than 10 per cent of their total main workers in 2011. In the midst of this general trend it is important to note that some districts moved in the opposite direction, and actually saw a movement towards agriculture. Between 2001 and 2011, Bijapur, Yadgir, Raichur, Bidar, Gulbarga and Bagalkot saw an increase in the number of workers with agriculture as their main occupation.

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Figure 7:Workers Leaving Agriculture Between 2001 And 2011 As Proportion of Total Workers In 2011

It is also difficult to ignore the geographical contiguity in these trends. This is clearest in the case of the six districts that have demonstrated a return to agriculture between 2001 and 2011. Bijapur, Yadgir, Raichur, Bidar, Gulbarga and Bagalkot mark a contiguous region in north Karnataka as can be seen in Figure 3. We can for simplicity refer to these six districts as Northern Karnataka, while making it clear that it does not cover the entire region normally associated with North Karnataka, nor does it correspond to either Bombay Karnataka or Hyderabad Karnataka. The rest of Karnataka also reflects a high degree of contiguity, though not to the same extent as Northern Karnataka. The districts with the greatest movement out of agriculture are in the southern part of the state. Udupi, together with the large contiguous region of Tumkur, Bengaluru Rural, Mandya, Chikkaballapur, Mysore, and Hassan, all recorded a movement out of agriculture which amounted to more than 10 percent of the main workers in 2011. There are districts to the south of these districts that have recorded somewhat less intense movements out of agriculture. Dakshina Kannada, Chamarajanagar, Ramnagara, Bengaluru Urban and Kolar recorded a movement out of agriculture that was between 5 and 10 percent of their main workers in 2011, and Kodagu recorded a movement out of agriculture that amounted to between 0 and 5 percent of its main workers in 2011. Taking geographical contiguity into account and an overall strong tendency to move out of agriculture, this entire southern part of the state can be treated as a single region. The remaining districts lying between the Northern region and the Southern region are all marked by a movement out of agriculture that amounts to between 0 and 10 percent of their main workers. This region both geographically and in terms of the movement out of agriculture lies in the middle. Based on the twin criteria of the intensity of movement out of agriculture and geographical contiguity we can divide Karnataka into three regions: the Northern region marked entirely by a return to agriculture between 2001 and 2011; the Middle region marked

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entirely by a moderate movement out of agriculture between 2001 and 2011 of less than 10 percent of the main workers in each district; and the Southern region dominated by districts with an intense movement out of agriculture of more than 10 percent of their main workers along with districts further south where the movement out of agriculture is just a little less intense. This regional break up can be seen in the map in Figure 8.

Figure 8:Regional Classification of Karnataka (Based on Release of Workers from Agriculture)

Changes in Three Regions of Karnataka The classification of the three regions based on the movements away from or towards agriculture between 2001 and 2011 would come up against the possibility of the two years being exceptions in some way. The years have been chosen simply because the Census provides us data for the second year of every decade. The patterns in those years would also be affected by other factors. It has been argued elsewhere that several parts of India see an urban-rural relationship which can be described as a mutual safety net. In bad rainfall years the workers seek work opportunities in urban centres, so that the city becomes the safety net for rural uncertainties. And when getting work in the city becomes difficult, they return to the village, especially if it is also a good rainfall year. The mutual safety net could exist both for cultivators and agricultural labour. If cultivators leave the work available for agricultural labour would decline, and when they return there would be an increase in the demand for agricultural labour. But this safety net can be expected to work better for cultivators, especially land-owning ones, than agricultural labour, especially landless ones. This is because the landowning cultivators have the certainty of land they can go back to cultivate, while the landless agricultural labour could have an element of uncertainty about the availability of work in agriculture. Thus, if workers in agriculture seek other options it would be more among the cultivators than agricultural labour, leading to a decline in the cultivator agricultural labour ratio. Conversely when there is a return

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to agriculture the cultivators would tend to come back more than agricultural labour, resulting in an increase in the cultivator-agricultural labour ratio. The effects of such short-term movements towards, and away from, agriculture can be captured to some degree if we take at least one additional year of Census data. Going back to 1991 would help us get an idea of whether the movements reflect a unidirectional trend or are a part of short-term movements during Census years. When seen together, in Figure 9, the cultivator-agricultural labour ratios do suggest the presence of the working of the short-term phenomenon of a mutual safety net. The cultivator-agricultural labour ratios in all three regions rise in 2001 and then fall in 2011. The chart however also tells us that these movements are not significant enough to offset the larger patterns in the three regions. The relative position of each of the three regions remains the same across all three years. Northern Karnataka has the lowest cultivator-agricultural labour ratios across all three years. This is consistent with historical data of famine in the late nineteenth century leading to the creation of a large landless agricultural labour class in the region. At the other end of the spectrum, Southern Karnataka has a consistently high cultivator agricultural labour ratio. This again is consistent with a history where old Mysore was dominated by small peasant land systems with corresponding revenue systems. The cultivator-agricultural labour ratio patterns in Middle Karnataka lie in between the other two regions.

Region-wise Cultivator-Agriculture Labour Ratio 3.00 2.50 2.00 1.50 1.00 CL/AL ratio CL/AL 0.50 0.00 1991 2001 2011 Year

North Middle South

Figure 9:Cl/Al Ratio Across Regions of Karnataka

Source: Derived from Census of India 1991, 2001 and 2011

Table 3: Region-wise Rural Transition

Workers leaving/entering Workers residing in Number of persons Agriculture rural areas while leaving rural areas working in the non-farm sector

Northern Region

1991-2001 -915595 +100216 -354316

2001-2011 +188733 -11636 -408031

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Middle Region

1991-2001 -996172 +454663 -1103709

2001-2011 -380563 -19043 -1574517

Southern region

1991-2001 -1118794 +158236 -1600710

2001-2011 -716668 -81278 -2668196

Source: Tabulated from Census of India 1991, 2001 and 2011 with birth rates and death rates from Sample Registration System, Census of India.

Note: Negative sign indicates that there were that many fewer workers/persons after adjusting for rate of natural increase. Positive sign indicates that there were that many more workers/persons after adjusting for rate of natural increase. The trends since 1991 also help us identify clear longer-term consistent patterns. Table 1 estimates the numbers of workers and persons moving into and out of agriculture as well as out of the rural areas after adjusting for the natural growth rate of population. It is clear from the table that there is a consistent movement out of rural areas. This movement may be less pronounced in Northern Karnataka especially during the decade 2001 to 2011 when there was a movement of workers into agriculture. But even in that decade the numbers of those who moved out of rural areas was greater than it had been in the preceding decade. It is also important to remember that these agriculture related changes occur in the context of the larger rural economy. And the response of the rural economy to movements out of agriculture did change quite significantly between the 1990s and the first decade of the twenty-first century. This can be seen in Table 1 which tracks these changes after taking the natural rate of growth of population into account. Between 1991 and 2001 at least a part of the decline in workers in agriculture was offset by an increase in workers who worked the non-farm sector while continuing to reside in rural areas. The increase in non-farm workers accounted only for a small portion of the workers leaving agriculture, but it nevertheless did exist. In contrast, between 2001 and 2011 there was a decline in the workers residing in rural areas and working in the non-farm sector across all three regions of Karnataka. This decline existed irrespective of whether workers were entering agriculture as in the Northern region, or leaving agriculture as in the other two regions. The reduction in even the limited ability of the rural non-farm sector to absorb workers leaving agriculture adds to the pressure to find employment for them elsewhere. The inability of the rural non-farm sector to absorb the workers demanding work results in an increase in share of those who do not work for more than six months, that is marginal workers. Even when there has been an increase in workers residing in rural areas and working in the non-farm sector it has been accompanied by an increase in marginal workers. Figure 10 tells us that the proportion of marginal workers to the total workforce during the three years we have considered was highest in 2001, that is the same year that recorded an increase in the workers in the non-farm sector. Correspondingly when there was a decline in the workers employed in the non-farm sector while residing in rural areas, in 2011, the proportion of marginal workers also declined. This would suggest that when workers return to agriculture or get non-farm work that can be accessed from rural areas, they are typically accompanied by others who also hope to get work but get it for less than six months.

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There is thus a tendency to move in large numbers in the direction of the overall change. From the point of view of growth strategies such a tendency would aid processes of agglomeration around growth centres. It would also demand growth strategies that are sensitive to fluctuations in the availability of labour. Figure 10 also reminds us that the challenge of dealing with marginal workers is greatest in the Northern region which consists of districts that have been among the poorest in Karnataka. What adds a further edge to the employment challenge is that the difference in the proportion of marginal workers between the three regions has narrowed in 2011.

Proportion of marginal to total workers 30.00

25.00

20.00

15.00

10.00

5.00

0.00 Northern Middle Southern

1991 2001 2011

Figure 10:Proportion of Marginal workers in total workforce

Source: Tabulated from Census of India 1991, 2001 and 2011

The experience of the last three decades in rural Karnataka points to several factors that an effective strategy of inclusive growth would need to take into account. There has been a significant movement of workers out of agriculture. This movement has varied across three regions of the state. In Northern Karnataka a sharp movement away from agriculture between 1991 and 2001 is followed by a movement towards agriculture in the next decade, while in the other regions there has been a consistent movement away from agriculture though the magnitude of that moved diminished quite considerably in the twenty first century. These movements have not been without their fluctuations, and workers have tried to manage the fluctuations in these movements through their own arrangements. They use rural and urban work opportunities as a mutual safety net, working in rural areas when urban opportunities are difficult and moving to cities when agriculture turns unviable. The tendency to move together in large numbers also suggests local informal support systems among themselves. In a situation where the regional diversity in the release of workers from agriculture adds a spatial dimension to the challenge of providing them adequate employment, the tendency to move together can be seen as an opportunity for agglomeration that could aid the emergence of new growth centres.

Methodological Appendix This task required several methodological steps. Working with different census data required taking into account creation of new districts during that specific decade. Census of India, 2011 recorded 30 districts in Karnataka; Census of India 2001 recorded 27 districts in 2001 and Census of India, 1991

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recorded 20 districts in Karnataka. The data for these new districts in 1991 and 2001 was generated from disaggregated data at the sub-district level. The rate of natural increase was computed using data on birth and death rate. We have used the difference between the Birth rate in 1991 and the average death rate from the year 2000 to 2010 as the rate of natural increase between 2001 and 2011. For calculating rate of natural increase between 1991 and 2001, we used difference between the birth rate in 1981 and average death rate from 1990 to 2000. The reason for using birth rate in 1991 (or 1981) was to include those who were born in 1990 (1980) and will come of age and join the workforce by 2011 (2001). This rate of natural increase is simply the difference between number of births and number of deaths (per 1000 persons) in the district. However, due to lack of consistent data series at the district level, we have taken the rural birth and death rates for the state as a proxy for that of each of the districts within the state. This assumes that the variation in birth and death rates within a state is zero. Given the well-established fact of the poor quality of district level data, it was decided that the assumption of zero variation within a state was the best available option. To estimate the change over the decade – between 1991 and 2001 and between 2001 and 2011 – we first estimated what the population in each case would have been if there had been no change other than the natural increase in the population. For example, we got this estimate for population in 2011 by multiplying the 2001 population figures for all the districts by Karnataka’s rate of natural increase. This gave us the expected population for 2011 had the population grown only at the rate of natural increase. We then treated the difference between the actual population in 2011 and the expected population in 2011 as an indicator of whether people have moved into or out of the district. The same exercise was then carried out to estimate the change in agriculture and in non-farm activities. To capture the changes in agriculture we took the Census of India categories of occupations – cultivators and agricultural labour, both individually and together. By tracking the same process of natural increase of the 2001 population we got estimates for change in the other available Census categories – Household workers, and other workers. Changes in these two categories was classified as changes in the non-farm sector. As per Census of India main workers are those workers who have worked for major part of the reference period i.e. worked for six or more than six months. Carrying out this exercise for Main workers gave us a detailed picture of changes occurring within Agriculture (Cultivator and Agricultural Labour) and within the rural non-agriculture sector. Census defines a person as a cultivator if he or she is engaged in cultivation of land owned or held from Government or held from private persons or institutions for payment in money, kind or share. Cultivation includes effective supervision or direction in cultivation. And, a person who works on another person's land for wages in money or kind or share is regarded as an agriculture labour. This rate of natural increase is simply the difference between number of births and number of deaths (per 1000 persons) in the district. However, due to lack of consistent data series at the district level, we have taken the rural birth and death rates for the state as a proxy for that of each of the districts within the state. This assumes that the variation in birth and death rates within a state is zero. Given the well-established fact of the poor quality of district level data, it was decided that the assumption of zero variation within a state was the best available option. To estimate the change over the decade – between 1991 and 2001 and between 2001 and 2011 – we first estimated what the population in each case would have been if there had been no change other than the natural increase in the population. For example, we got this estimate for population in 2011 by multiplying the 2001 population figures for all the districts by Karnataka’s rate of natural increase. This gave us the expected population for 2011 had the population grown only at the rate of natural increase. We then treated the difference between the actual population in 2011 and the expected population in 2011 as an indicator of whether people have moved into or out of the district. The same exercise was then carried

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out to estimate the change in agriculture and in non-farm activities. To capture the changes in agriculture we took the Census of India categories of occupations – cultivators and agricultural labour, both individually and together. By tracking the same process of natural increase of the 2001 population we got estimates for change in the other available Census categories – Household workers, and other workers. Changes in these two categories was classified as changes in the non-farm sector. Carrying out this exercise for Main workers gave us a detailed picture of changes occurring within Agriculture (Cultivator and Agricultural Labour) and within the rural non-agriculture sector.

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Chapter 6 Engines of Growth and Inclusiveness The preceding chapters have brought to the fore the two major challenges to developing a strategy for sustainable economic growth in Karnataka: an excessive dependence on Bengaluru for the growth of the state’s economy, and the difficulties in meeting the demand for work that emerges from the release of workers from agriculture. In order to address these challenges, we first identify non- Bengaluru growth centres that can potentially play a bigger role in the state’s economic growth. We then place these growth centres in the context of the release of workers from agriculture in different parts of the state. These exercises allow us to outline the specific points of intervention that are best suited for the success of the growth centres as well as the objectives of inclusiveness and decency of work demanded by Goal 8 of the Sustainable Development Goals.

Choice of Potential Growth Centres It is conventional when identifying potential growth centres in Karnataka to look at towns and cities that are already quite large. The attraction of this approach lies in the fact that these urban centres have a relatively smaller distance to travel to become major metropolises. The effectiveness of this route to growth centres is however constrained by the nature of economic growth in Karnataka. The growth of some cities in the state can be hampered by the dominance of a single city as has been the case in Karnataka. The growth of Bengaluru has drawn manpower resources from the rest of southern Karnataka. This has included low skilled workers in the garment industry as well as technical manpower for the information technology industry. The gravitation of this manpower towards Bengaluru has reduced their availability to other urban centres of southern Karnataka. In the case of technical manpower, the areas affected by Bengaluru could extend even further to the northern parts of the state and beyond. This limits the growth of the cities other than Bengaluru. The existing size of these cities is then more a commentary on their past history rather than their present potential. This would make it more difficult to bridge the gap between them and Karnataka’s capital city. Moreover, the emphasis on current size misses out on the growth aspect altogether. It ignores small centres that are growing rapidly. It also does not distinguish between large centres that are growing rapidly and the large cities that have become sluggish. An approach that pays greater attention to the present, as well as the future potential, would need to focus rather more on the pace of growth in an urban centre. Following this approach, we identify centres which display strong processes of agglomeration, without too great an emphasis on size, and then help the growth centre gather, and sustain, further momentum. It is possible that some of the centres with rapid recent growth have a long way to go before they become major engines of growth of Karnataka’s economy. But they have two major factors in their favour. First, they are currently in the process of high rates of agglomeration. People are, for whatever reason, already gravitating towards these centres. This agglomeration is taking place alongside Bengaluru, and is hence overcoming the magnetic effect of Bengaluru on workers and capital. And second, this option is more open to urban centres of different sizes. The focus on growth allows the possibility of identifying growth centres that are currently small but are on a path to becoming major urban centres. At the same time, it will also capture large cities that are growing rapidly. The growth centre-based option is thus more inclusive and less likely to miss out on newly emerging points of agglomeration. Our search for new growth centres in Karnataka thus begins from the points of agglomeration between 2001 and 2011. As villages become towns and then larger points of agglomeration, their growth would extend beyond existing boundaries. It is then possible that the data for a town would not capture the spill-over beyond its boundaries. In order to overcome this problem, we have looked at the urban population in the taluka as a whole. Using the taluka as the unit of analysis we have taken the growth rates of the urban population of all taluks in Karnataka. We have identified as potential

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growth centres all talukas where the urban population has grown by more than 50 percent between 2001 and 2011. With Karnataka’s population having grown by 15.6 percent during that decade the benchmark we have set would be appropriate to capture points of agglomeration. The talukas that meet this benchmark of agglomeration are given in Table 4. Table 4: : Features of Potential Urban Growth Centres in Karnataka

District Taluka Rate of growth of urban population between 2001 and 2011

Bidar Aurad 90.46

Chikkballapura Bagepalli 63.64

DakshinaKannada Bantval 111.42

DakshinaKannada Beltangadi 102.42

Tumkur Chiknayakanhalli 67.54

Chikkballapura Gauribidanur 56.78

Mysore Heggadadevankote 113.68

Chitradurga Holalkere 51.08

Bengaluru Rural Hosakote 56.87

Bagalkot Hungund 76.94

Bengaluru Rural Nelamangala 89.03

Bellary Sandur 131.55

Shimoga Sorab 52.58

Udupi Udupi 70.79

Source: Rates of growth calculated from Census of India, 2001 and 2011.

Even among these points of agglomeration the rates of growth show considerable diversity. They range from Soraba and Holalkere that barely cross the 50 percent mark and Sandur, Heggadevanakote, Bantval and Beltangadi which have more than doubled in size over the decade 2001 to 2011. This diversity extends to the larger context from which these centres have emerged. A major thrust has, in most cases, been provided by the movement out of agriculture in the neighbouring rural areas. As can be seen in Table 5, these potential growth centres have often emerged in districts that have seen a considerable movement out of agriculture between 2001 and 2011. But the number of workers who have left agriculture varies quite substantially, from over 1.6 lakhs in Tumkur to less than thirty thousand in Chitradurga. What is more, there are two districts – Bidar and Bagalkote – in which potential growth centres are located that have recorded an increase in workers in agriculture, that is either as cultivators or agricultural labour, even after adjusting for the natural rate of growth of

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population. This diversity suggests that the factors causing the 14 agglomerations we have identified as potential growth centres could vary a great deal and demand a closer look. Table 5: Estimates of Workers Leaving Agriculture in Districts with Potential Growth Centres

District Potential growth centres Estimate of workers who left agriculture in the district between 2001 and 2011

Bidar Aurad 20333

Chikballapura Bagepalli and Gauribidanur -53782

Dakshina Kannada Bantval and Beltangadi -37516

Tumkur Chiknayakanhalli -160382

Mysore Heggadadevankote -79703

Chitradurga Holalkere -29201

Bengaluru Rural Hosakote and Nelamangala -46235

Bagalkot Hungund 960

Bellary Sandur -43610

Shimoga Soraba -34840

Udupi Udupi -67537

Source: Based on calculations done for Bajar, S (2017) “Locational Mismatch between the Demand for Jobs and the Demand for Skills in India” NIAS Working Paper: WP6-2017. ISBN: 978-93-83566-26- 6

Note: The negative sign indicates workers leaving agriculture. The positive numbers refer to workers entering agriculture. A part of this diversity is explained by the distinction we had made in our approach, outlined in Chapter 2, between capital, labour and natural resource led growth. In capital led growth the process of movement out of agriculture and rural areas, and towards urban centres, is driven by the accumulation of capital. Taluk wise estimates of the accumulation of capital are difficult to come by. Based on the understanding that the accumulation of capital, at least in its initial stages, would be accompanied by an increase in the value of private property, we have used property taxes as an indicator of the levels of capital accumulation in the taluk. It is possible that property taxes in a potential growth centre do not completely capture the entire capital accumulation as some of the capital could be invested outside the potential growth centre, maybe even in property elsewhere. But to the extent that we are, at this stage, not seeking to explain the process of capital accumulation but the rise of a potential growth centre, our interest is only on the capital that is locally invested. Property taxes as an indicator of local capital would then be appropriate.

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Not all the potential growth centres are the result of capital led processes. As is evident from Table 6, the average property tax collection between 2015 and 2019 varied a great deal across the potential growth centres. The potential growth centres in Bengaluru Rural, Dakshina Kannada and Udupi districts had far greater collections of property tax than other districts. The property tax collected in Nelamangala, in Bengaluru Rural district, was over 40 times greater than that amount collected in Aurad in Bidar district. Even among the four potential growth centres with high property tax collections – Nelamangala, Hosakote, Bantval and Beltangadi – the processes influencing the generation of these collections could be quite different. The collections in Nelamangala and Hosakote are likely to be influenced by the proximity to Bengaluru, and the spiralling real estate prices in that metropolis. Bantval and Beltangadi may reflect more decentralized processes at work. On the whole, based on property tax collections, it would be appropriate to see four of the potential growth centres – Nelamangala, Hosakote, Bantval and Beltangadi – as being the result of capital led processes. Table 6: Property Tax Collection in Potential Growth Centres

Potential growth Average property tax collection (2015-2019) centre (Rs. In lakhs)

Aurad 22.10

Bagepalli 37.20

Bantval 451.90

Beltangadi 329.77

Chiknayakanhalli 75.00

Gauribidanur 94.41

Heggadadevankote 102.79

Holalkere 38.95

Hosakote 579.58

Hungund 104.21

Nelamangala 940.88

Sandur 41.23

Sorab 60.33

Udupi 672.96

Source: Tabulated from tax data from the Department of Rural Development and Panchayat Raj, Government of Karnataka

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It would also be possible to identify the natural resource led processes that have contributed to the emergence of potential growth centres. This would be most evident in centres where there is considerable presence of mining. Table 7 tells us that Sandur belongs to a district, Bellary, which accounts for over 40 percent of the income generated from mining in Karnataka. Such natural resources led growth would necessarily lead to the accumulation of capital, but there is little reason to believe that this would lead to capital led growth in Sandur. Despite Sandur having the most rapid growth in population among our potential growth centres, it has one of the lowest collections of property tax. It may also be necessary to consider the possibility of natural resource led potential growth centres emerging not because of the potential of profit, but due to the pressures on those living in forests. While more detailed analysis is necessary to arrive at a meaningful conclusion, it may be possible that forced migration out of forest lands could have contributed to the population growth in Heggadadevanakote. Table 7: Share of Districts with Potential Growth Centres in Karnataka’s mining income over the Period 2011 to 2017

District Potential growth Share of district in Karnataka's mining income (In centres percent)

Bidar Aurad 0.78

Chikballapura Bagepalli and 1.38 Gauribidanur

Dakshina Bantval and Beltangadi 1.21 Kannada

Tumkur Chiknayakanhalli 3.19

Mysore Heggadadevankote 0.40

Chitradurga Holalkere 0.51

Bengaluru Hosakote and 2.15 Rural Nelamangala

Bagalkot Hungund 2.09

Bellary Sandur 40.71

Shimoga Soraba 1.35

Udupi Udupi 1.79

Source: Tabulated from data from Department of Economics and Statistics, Planning Department, Government of Karnataka

The processes leading to the emergence of the remaining six potential growth centres would appear to be labour led. But here again it is possible that the types of labour that have prompted each growth centre would be quite different. A growth centre in a district where workers are returning to agriculture is likely to be quite different from those where workers are leaving agriculture in large

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numbers. Further diversity is possible even within these broad categories. The return of workers to agriculture, for instance, could be the result of either aspiration or desperation. Aspirations would emerge from the possibility of a profitable agriculture, even as there could be others returning to their villages due to the desperation caused by not being able to make a living in urban centres. In the aspiration driven case, where the return of workers is in response to the emergence of a more modern and profitable agriculture, the growth centre could emerge as a point of supply of inputs to that agriculture as well as the route to potential markets. In cases of desperation, where the workers are returning to their village because of adverse conditions in the large cities, they may like to retain the option of going back to the cities when the opportunity arises. In such cases the potential growth centres could emerge as transport hubs. Identifying the specific processes that have led to the emergence of the 14 specific growth centres would then call for a more detailed analysis than is possible in this report. Yet in the midst of this diversity it is important to note that the emergence of the 14 potential growth centres are likely to be driven by processes that are very different from those that have caused the growth of Bengaluru. Bengaluru’s growth, especially from its part in the information technology circuit, has been driven by its educated manpower. The role of education in the 14 potential growth centres we have identified has been much less significant. As can be seen in Table 8, in 10 out of the 11 districts where the 14 potential growth centres are located, the proportion of main workers in urban areas who are illiterate or have less than secondary school education is greater than the state average. Correspondingly, in the same 10 districts the proportion of main workers in urban centres who have completed more than secondary education is less than the state average. The only exception to this pattern is Mysore district. But here again it must be pointed out that that the average education levels in Mysore district is likely to be more heavily influenced by trends in Mysore rather than by conditions in relatively less developed Heggadadevanakote. The somewhat lower levels of education further reinforce our argument that the potential growth centres that have emerged in the decade 2001 to 2011 have done so by tapping workers who may not have found a place in the growth of Bengaluru led by educated labour. Table 8: Education Levels of Main Workers in Urban Areas of Districts in which there are Potential Growth Centres

District Potential growth Illiterate and Proportion of Proportion of centres educated main workers main workers below matric/ who have who have a matric/ diploma, Secondary secondary certificate, education but degree and less than above graduate

Bidar Aurad 49.6 29.3 21.1

Chikballapura Bagepalli and 58.9 25.0 16.1 Gauribidanur

Dakshina Bantval and 55.2 26.4 18.4 Kannada Beltangadi

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Tumkur Chiknayakanhalli 49.2 27.4 23.4

Mysore Heggadadevankote 44.7 28.4 26.9

Chitradurga Holalkere 49.5 29.7 20.8

Bengaluru Rural Hosakote and 50.4 32.0 17.6 Nelamangala

Bagalkot Hungund 58.6 23.8 17.6

Bellary Sandur 59.9 22.3 17.8

Shimoga Soraba 53.4 25.4 21.2

Udupi Udupi 52.3 27.6 20.1

Karnataka 45.7 29.1 25.2

Source: Tabulated from Census of India, 2011

Note: The census of India, 2011 provides data for the illiterate, the literate but below secondary school, secondary school but below graduate, technical diploma or certificate not equal to degree, graduate and above other than technical degree, technical degree or diploma equal to degree or post- graduate degree. These six categories have been clubbed in chapter into three: below secondary school (includes illiterate and the literate but below secondary school); Secondary school but below graduate (this consists of secondary plus higher secondary); and Above secondary education (this includes technical diploma or certificate not equal to degree, Graduate and above other than technical degree and technical degree or diploma equal to degree or post-graduate degree) While a complete strategy for each of these potential growth centres calls for a detailed analysis of the processes that are already in place there and the unexplored potential of these centres, it is possible at this stage to identify the course such a strategy would need to take. It would need to begin by identifying the nature of the circuits that have led to its growth, particularly whether they are capital led, labour led and/or natural resources led. If they are capital led the effort would need to be to intervene in ways that enhances the potential of this capital to tap both resources and markets to generate more rapid growth. If they are labour led the interventions would need to be designed in ways that both increases employment and helps move labour up the education ladder so that they can tap more lucrative circuits. And if they are natural resource led, sufficient attention would have to be paid to the sustainability of the resource, as well as the conditions of work of labour especially the impact on their health.

Spatial Dimension We have thus far discussed the potential growth centres as if their location did not matter. But as we move on to place these centres into a larger strategy for meeting the goal of inclusive growth with decency, the spatial dimension plays two important roles: one as an opportunity, and the other as a challenge.

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Growth Areas The spatial opportunity arises from the benefits of geographical contiguity. Neighbouring growth centres provide a certain synergy to the growth process. There are possible spill-overs of the growth of one centre into the neighbouring ones. The road that connects one growth centre would also benefit neighbouring talukas, as would a professional college. But the existence of these spill-overs, and the ability to tap them, cannot be assumed to always exist. There may be growth centres where the neighbouring talukas do not have the capital or the education levels to fully tap the benefits of nearby growth. It is thus necessary to identify those growth centres that have already demonstrated a spill-over effect. This can be done by defining a growth area around a growth centre. This growth area would cover adjoining growth centres. We could also extend it to cover growth centres that are connected through taluks which have grown well above the state average but less than the 50 percent benchmark that we had set for a growth centre. We can then define a growth area as consisting of one or more growth centres that are contiguous to each other or are connected by talukas whose urban population has grown by between 25 and 50 percent in the decade 2001 to 2011. From this perspective the growth area that has emerged around Bantval and Beltangadi would appear to have demonstrated the greatest economic potential. Not only are these two taluks adjacent to each other but they are also among the more rapidly growing potential growth centres in terms of population and levels of collections of property tax. The synergy from contiguity for these two potential growth centres is further strengthened by their proximity to another capital led growth centre, Udupi. As can be seen in the map (Figure 11), they are only separated from Udupi by the taluks of Mangalore and Karkala which have also grown by between 25 and 50 percent in the decade 2001 to 2011. What is more, Mangalore is already a major city, thereby strengthening the case for a larger growth centre area. In addition, the 25 to 50 percent category also brings into focus Kundapura to the north and Puttur to the south. We can then identify a major growth area covering the taluks of Kundapura, Udupi, Karkala, Mangalore, Bantval, Beltangadi, and Puttur. This growth area would also have the advantage of being capital led. For convenience we can refer to this as the Udupi-Bantval- Beltangadi growth area.

Figure 11: Map of Taluks According to Population Growth Between 2001 and 2011

Source: Based on data tabulated from Census of India, 2001 and 2011

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Another significant potential growth area would be around the growth centres of Nelamangala, Gauribidanur and Bagepalli. Gauribidanur and Bagepalli do not share a border but are in close proximity to each other. Gauribidanur and Nelamangala can be spatially connected once we include the taluka of Doddaballapura that lies between them. Doddballapur had grown at a rate between 25 and 50 percent in the decade 2001 to 2011. The lower growth rate criterion extends this growth area to the south to include Magadi and Ramanagara. The potential for this to be a capital-led growth centre is however hampered by the uneven property tax collections in the growth centres within this growth area. While Nelamangala – possibly due to its proximity to Bengaluru – has the highest collections of property tax among the 14 growth centres, Bagepalli lies closer to the other extreme. For convenience we can refer to this as the Nelamangala-Bagepalli-Gauribidanur growth area. A third growth area emerges from linking two potential growth centres, Holalkere and Chiknayakanhalli, through Hosadurga. The growth in the population of Hosadurga during the decade 2001 to 2011 was also between 25 and 50 percent. This agglomeration has been largely labour led as the property tax collections in the two growth centres, Holalkere and Chiknayakanhalli, are close to the lower end among the 14 growth centres. For convenience we can refer to this labour led agglomeration as the Holalkere-Chiknayakanhalli growth area. Extending the principles of contiguity and 25 to 50 percent growth to areas around a single potential growth centre we can identify another growth area that links the potential growth centre of Heggadadevenakote to Mysore and Srirangapatna. This growth area has the advantage of including the second largest city in Karnataka, Mysore. It is interesting to note that though Mysore and Srirangapatna are the better-known urban centres in this growth area, the most rapidly growing urban population is in the taluka of Heggadadevenakote. This growth area undoubtedly has the potential for capital-led growth. The property tax collections even in Heggadadevanakote are not very low, and Mysore has much higher collections. The real advantage of this growth area would however be its higher education levels. A more detailed analysis would pay considerable attention to its potential as a growth centre led by educated labour. For convenience we refer to this growth area as the Heggadadevanakote growth area. Further north there are signs of the emergence of a natural resource led growth area around the potential growth centre of Sandur. The contiguous talukas of Kudligi, to the south of Sandur, and Bellary and Siriguppa to the north have seen a growth in urban population between 2001 and 2011 in the range of 25 to 50 percent. With over 40 percent of Karnataka’s mining income coming from Bellary district, this would clearly be a natural resource led growth centre. For convenience we can refer to this as the Sandur growth area. A case can also be made out for a growth area beginning from the potential growth centre of Hungund and extending towards the northeast to include Lingsugur and Devadurga. Both Lingasugur and Devadurga had a growth in urban population in the range of 25 to 50 percent during the decade 2001 to 2011. Property tax collections in Hungund are not among the lowest but are not high enough to suggest it becoming the centre of a capital led growth area. The indicators of education too are not entirely comforting. The percentage of those with levels of education that are lower than secondary school is well above the state average, and the proportion of those with education levels greater than secondary school are much lower than the state average. Hungund is also in a district that has seen a return to agriculture between 2001 and 2011. While a more detailed analysis of this urban growth is needed, it would appear to be led by a need for supplies and a primary market for agricultural goods, as well as the demand for a transport hub. For convenience we refer to this agglomeration as the Hungund growth area.

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The six growth areas that we have identified can form the non-Bengaluru locations for that can attract or develop growth circuits. As they have emerged alongside the growth of Bengaluru, they would be consistent with the continued growth of Karnataka’s main metropolis. The specific choice of strategies to encourage these growth areas would need to link the processes that these areas have already demonstrated with suitable larger circuits, whether they are from within the state, and elsewhere in the country or beyond national boundaries.

Developing Inclusiveness The case for extending growth centres to growth areas was built around the synergy that would emerge from contiguous areas. This argument can be taken a step further to argue that a successful growth area would be able to provide employment opportunities to neighbouring districts, in much the same manner as Bengaluru has done. As none of these growth areas are currently employment magnets of the magnitude of Bengaluru, their effects, such as they are, would be more localized. Their greatest impact would then be if the talukas in the growth areas coincide with those that are most in need of development. That is, if the growth areas include talukas that are in the list of Most Backward talukas in the report of the High-Power Committee on Redressal of Regional Imbalances headed by Dr DM Nanjundappa. This effect would be greatest when a most backward taluka in the Nanjundappa committee report is also one of the 14 potential growth centres that we have identified. That is to say, a most backward taluka has emerged as a major point of agglomeration between 2001 and 2011. As we have noted earlier the emergence of this point of agglomeration does not in itself guarantee great economic success. The point of agglomeration may have emerged as a transport hub for those leaving agriculture and seeking short-term employment in urban centres. The agglomeration could also be the result of the urban settlements emerging as a point of trade in agricultural inputs for those returning to agriculture out of distress or in pursuit of opportunities. In such cases the growth in population at these points of agglomeration need not immediately transform into the emergence of major economic centres. But to the extent that they would still provide some jobs and other economic opportunities, their impact on a most backward taluka cannot be underestimated. It is thus quite significant that four of the 14 potential growth centres – Heggadadevanakote, Sandur, Bagepalli and Aurad – are among the Nanjundappa Committee’s list of Most Backward Talukas. When seen in the larger context of affecting the challenge of backwardness, however, the impact of these points of agglomeration is somewhat more limited. The potential growth centres in the most backward category account for only four of the 39 talukas. We could broaden the net to include the talukas that are not potential growth centres but are in the growth areas we have identified. This would bring in Devadurga and Lingsugur, but would still leave us impacting only six of the 39 Most Backward Talukas of the Nanjundappa Committee report. The potential growth centres and their growth areas would then not in themselves provide a major thrust in the battle against extreme backwardness. In areas where economic processes are not conducive to rapid growth, an inflow of state funds may only lead to capital being diverted to other regions. A beneficiary of a state loan may well feel justified in investing the amount in other areas that promise greater returns thereby helping him repay the loan in full. Thus, unless the underlying processes are taken into account, a mere increase in funds need not result in a substantial reduction in backwardness. The need to consider underlying processes gains greater significance in a larger context where work and other opportunities are emerging outside agriculture. The regions that benefit the most from this process are those where the rapid movement out of agriculture is matched by the emergence of growth centres that can absorb this labour. This is most evident in the case of the Udupi-Bantval- Beltangadi growth area. The talukas in this area are spread across the districts of Udupi and Dakshina

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Kannada which have recorded a substantial movement out of agriculture. The backward region of what we have referred to as Northern Karnataka has only one of the six growth areas – the Hungund growth area – located in it. And this growth area too is far from having adequate capital. Developing the engines that would provide inclusive economic growth in Karnataka would thus call for a diverse strategy, where interventions are sensitive to local processes. This strategy would recognise the risks of an excessive dependence on Bengaluru and would try to simultaneously develop alternative circuits of growth, building on agglomerations that are already taking place. In order to do so it would be necessary to go beyond merely allocating funds to these growth areas. It would be necessary to recognise the specific constraints that exist in each of these growth areas and intervene in ways that would remove them. In capital led growth areas – particularly the Udupi-Bantval- Beltangadi growth area – it would be necessary to identify the potential to link the growth area with national and global circuits that would enhance its growth potential. In growth areas where there is a severe deficit of capital, it would be necessary not only to infuse capital but to do so in a way that improves the ability of the growth area to tap larger circuits of growth. In areas where there are no major growth areas, the government may need to take a more direct initiative to initiate growth processes. These could include terrain specific agriculture initiatives. These initiatives would necessarily involve farming practices but would also cover other dimensions of the circuit including its market. Karnataka has a large number of governmental schemes that can be dovetailed into the overall economic strategy. For this exercise to be effective it would require a detailed evaluation of each of these schemes to first check their current effectiveness. That evaluation would also allow the government to identify which schemes are best suited to act as vehicles for the new strategy to achieve the SDG targets.

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Chapter 7 Recommendations and Roadmap The findings of this committee point to a clear roadmap for the future of Karnataka’s economy so as to meet the goal of sustained growth that provides decent work for all. The current situation in Karnataka, where there are lakhs of workers leaving agriculture in search of other work, poses an economic as well as social challenge. The magnitude of this challenge is increased by the divergent trends across the state, ensuring that a one size fits all approach will not succeed. To transform this challenge into an opportunity the government would have to intervene in a way that would facilitate the movement out of agriculture into industries and services with higher productivity. For this process of absorption of agricultural workers into non-agricultural work to be sustainable, it would also have to go beyond the currently increasing dependence on Bengaluru. An effective strategy to achieve Goal 8 of the Sustainable Development Goals would then have interventions at different stages of the process of the movement of workers out of agriculture and into growth areas other than Bengaluru that provide decent work. The committee recommends the following specific and interconnected interventions. 1. Agricultural land banks: These banks will be institutions where farmers can deposit their lands when they are not cultivating it. The Agricultural Land Bank would then offer these plots to others seeking land for cultivation for the period for which the farmer has deposited the land. The rent the bank gets would then be passed on to the land owner after deducting an amount that covers the costs incurred by the bank and no more. The main effect of this move would be to reduce fallow land. It will also provide the agricultural land owner some returns while he or she seeks urban work opportunities. These banks would need to be state owned so as to have the credibility that allows farmers to deposit their land without fearing their losing it. 2. Agencies to cultivate land that would otherwise be left fallow: Agricultural Land Banks would only be effective if those who hire in the land can cultivate it profitability. A major contributor to this profitability could be the economies of scale. A large cultivating agency that is able to hire a significant number of available otherwise-fallow land would potentially have several economies of scale. They would be able to make optimal use of tractors and other fixed capital they own. They may also have advantages in procuring other agricultural inputs. They could also become an established source of work for agricultural labour. If the agency is large enough it could move agricultural labour around locally, so that these workers are not entirely dependent on the demand for their services within the village. There are large agencies already operating in rural Karnataka that could be encouraged to grow into Cultivating agencies. The Shri Kshetra Dharmasthala Rural Development Project already operates in several agriculture related activities in rural Karnataka. If a number of Cultivating agencies emerge there would also be sufficient competition among them to ensure the market for land from the Agricultural Land Banks does not become monopsonist. 3. Enlarged extension system for production and market knowledge: An effective large Cultivating agency could also develop subsidiaries that would sell a part of their economy of scale to other farmers cultivating their own land. They could, for instance, set up a tractor hiring service that would offer the use of tractors at a more efficient prices than the farmer buying his own tractor. The agencies providing these services need not be confined to subsidiaries of larger Cultivating agencies. There could also be other more specialized agencies offering specific services, ranging from tractors and harvesters, to knowledge about advanced agricultural practices. The economies of scale of these service

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providers would enable them to provide the services at prices lower than what is otherwise available to the farmer, and, especially in the case of knowledge, it could provide inputs that the farmers would otherwise not even have access to. The state government could incentivise the setting up of such agencies. 4. Farmgate procurement to a forward market: The widespread success of the Green Revolution strategy was based on the state intervening in at least three critical points of agricultural activity: providing credit, providing high yielding seeds, and guaranteeing procurement at predetermined procurement prices. This system worked well as long as the procured food grain could be sold on the Public Distribution System. The PDS in turn could absorb all that was procured due to the shortage of food grain. Once the country began producing surplus grain, however, the PDS could no longer absorb all that was procured, leading to the accumulation of large unsold stocks and hence an unmanageable food subsidy. What is thus needed is an alternative set of interventions to ensure credit, access to high technology, and addressing market fluctuations. The proposed set of cultivating agencies, alongside other service providers, would, if it works well, be of a size where access to bank credit would not be a problem. The emergence of service providers would ideally help provide high technology to the farmers. The state’s extension system could also be developed on the lines of a low cost, if not free, service provider. The difficulty would lie in guaranteeing a market for what is produced. In a system in which there is a surplus, as we have already noted, it is not economically viable to provide such a guarantee. But within an overall surplus there can be short-term deficits in specific crops. These deficits are usually reflected in higher market prices for these crops, just as specific surpluses are reflected in a fall in prices. But these prices are typically only known after the crop has been produced, often leaving the farmer with having to sell his products at throwaway prices or the consumer with very high prices. The way out of this difficulty would be to provide farmers the prices that they will receive before they have sown their crop. The farmers can then decide whether it would be viable to invest in that crop or not. And if the prices are projected to be very high, they would attract more farmers leading to a moderation of prices. This would happen if there is a forward market for the farmer’s produce. An effective forward market-based system would ensure the produce of the farmer is sold at the farmgate at prices that are fixed before the farmer sows his crop. The agency that procures the crop from the farmgate would then sell it in the market at the prevailing prices. If the prices are higher than what was agreed with the farmer the agency benefits, but if the market prices fall, the farmer is protected. That is, the farmer has sold his risk of fluctuating prices to the agency. The success of this system would depend on the accuracy of predicting prices at the time of sowing. The agency would have to focus on what is a realistic estimate, at the time of sowing, of prices that would exist at the time of harvest. These prices may or may not be remunerative. If the farmer does not consider the prices to be remunerative, he would have the option of not sowing the crop. The infrastructure of the existing procurement system can be modified to create this forward market centred system. It would also be necessary to reform the APMC to make it consistent with the new system. 1. Mobile skill development workshops for agricultural workers: There is the possibility that an increasing number of cultivators, without the benefits of the economies of scale, would consider the forward prices unremunerative. This would increase the attractiveness of depositing their land in an Agricultural Land Bank and even as they themselves seek opportunities outside agriculture. Such a transition would be enabled by

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their acquiring new skills. Many of them do so informally. But this restricts them to lower end skills. The quality of the skills that are learnt as well as the possibility of going on to learn higher-end skills are likely to be better if the cultivators and agricultural labour leaving agriculture have access to formal skill development centres. These centres typically require the workers to leave opportunities of earning what they can, in order to attend their sessions. This involves an opportunity cost that those leaving agriculture may not be able to afford. It is therefore necessary to create mobile skill development workshops for agricultural workers, both cultivators and agricultural labour, that will visit villages and train whoever seeks to develop these skills. The timing of these mobile workshops would also have to be worked out in a way that minimises the opportunity cost of workers seeking to learn new skills. 2. Regional transport networks: The mobility need not only be in terms of getting skill workshops to the villages, in some cases it may be cheaper to better connect workers with nearby skill centres. This would require an efficient and affordable local transport systems. The local transport systems could also be developed to improve connectivity between workers and nearby non-agricultural workplaces offering decent work. 3. Industrial estates in growth areas: The process of absorption of these workers would be aided by the further development of the growth areas we have identified. These growth areas are around points of agglomeration, that is, areas towards which there has already been a convergence of people. But the motivations for each agglomeration could be very different. There are agglomerations around emerging industrial centres. There are other agglomerations that emerge around no more than transportation hubs which workers use when traveling to places of work that are further away. The differences in the processes of agglomeration also result in each growth area having its own advantages and deficits. The Udupi-Bantwal-Belthangady Growth area has demonstrated an ability to absorb the labour being released from agriculture on a very substantial scale. Preliminary indications suggest that the growth in this area is likely to be led by the availability of small and medium local capital as well as workers with levels of education that are in demand. This could then be referred to as a Capital-led growth area. In contrast there are growth areas where preliminary analysis suggests there is a dearth of capital. The agglomeration here is largely led by their becoming hubs for the movement of labour. Preliminary analysis suggests that the Nelamangala-Bagepalli-Gauribidanur Growth area would be an example of Labour-led growth area. Preliminary analysis suggests that the agglomeration in the Sandur Growth area has been prompted primarily by mining activities. This would then be an example of a Natural resources led Growth area. The overall growth of the state’s economy, particularly given the need to reduce the dependency on Bengaluru, requires the further development of these growth areas to levels where they can absorb workers being released from agriculture as well as other demand for work. This would be aided by the development of industrial estates that would attract capital, which would attract labour, and the availability of labour would attract further capital. To begin this process, the industrial estates would need to offer specific advantages to capital. Some of these advantages could take the simple form of providing a work environment that is conducive to large scale industrial growth. This would involve providing electricity and water, wastewater treatment plants, garbage disposals, fire prevention systems, improved telecommunications, access to banks and post offices, logistic services, and internal roads, transport, clinic, school, bank, shops, restaurants and canteens. There would need to be special attention paid to the housing of workers. In the short-term there would need to be state

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supporting housing facilities that are so designed as to ensure they do not gain real estate value. Workers would then use these facilities only until they can afford better housing. The better housing would come from encouraging private sector real estate projects close to places of work. The projects in turn will gain real estate value with the overall success of the Growth area. These industrial estates could also be promoted to attract capital. Local investors meet could be organized to attract both global and local capital and create a buzz about the industrial estate. There could be Sister-city arrangements with foreign cities in which Karnataka has a comparative cost advantage. For example - Cashew industry can establish export linkages with another consuming country. A mayor to mayor level arrangement can be sought.

The challenges in creating industrial estates that effectively enhance a growth area would vary depending on the advantages that are inherent in the processes of agglomeration that are already under way. The Udupi-Bantwal-Belthangady Growth area may already have local capital, which only needs to be enhanced and connected to larger growth opportunities. Other Growth areas may require substantial infusion of capital, especially in Northern Karnataka. The effective implementation of these seven interconnected interventions would require a more thorough evaluation of the advantages and disadvantages available on the ground in each growth area and in the areas releasing labour. This could be done through three specific surveys: • The first survey would look at the demand for employment and employment opportunities across the state. • The second would look at savings and investment patterns both in the Growth areas and outside. • The third would look at investment decisions that are currently being made in order to trace the factors that contribute to local capital moving out of the state, especially in capital deficient regions like Northern Karnataka.

The Committee would be happy to oversee the process of initiating and undertaking these surveys. It is recommended that these surveys be commissioned by the Department of Planning, Monitoring and Statistic.

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Annexures Annexure 1 Committee Meetings and Decisions Chairman: Sri. G. Gurucharan IAS (Retd)

Preliminary Meeting: 30.04.2018.

In the first meeting all the targets and indicators of SDG 8 were discussed and decided. It was decided to remove the target 8.a. as this is not relevant to the State and remove 8.b. as it was already being taken cared by target 8.8. It was decided that base line data for all the indicators, the availability of data, periodicity, unit of data shall be revisited in the next meeting and further suggestions will be made.

Second Meeting: 16.05.2018

After detailed discussions it was decided that the Skill and Labour department can be made as nodal department for implementation of Goal 8. In addition to sectoral growth rates of all sectors, the sectoral share (contribution) to GSDP can be considered as additional indicators. “Share of unemployed persons in population aged 15-24 (percentage)” will be rephrased as “Share of unemployed persons in population aged 15-35 (percentage)”. The targets/ indicators relevant to other goals will be removed from the purview of Goal 8.

Third Meeting: 05.06.2018

Chairman suggested to form a small sub-group under the chairmanship of Dr. Narender Pani to fine tune the data availability and look into the data collection methods and suggest a macroeconomic conceptual model for growth. Nodal departments were decided for each target and associated data points and meetings scheduled with them about the data availability, periodicity and other as required in Data sheet and also for mapping of Schemes. It was decided that data relating to all the indicators are to be collected from the department and letters will be written requesting to provide the data concerned immediately.

Fourth Meeting: 26.06.2018

Indicator wise data availability, frequency of collection and scheme mapping was discussed in length and it was suggested to not exclude the schemes which create capital. For 8.2.3. it was suggested to use the sector wise per capita annual growth rate instead of per worker. For 8.3.3. it was suggested to recommend corrections for collection and frequency of MSME turnover data. The ToR for the sub- committee was presented and approved.

Fifth Meeting: 17.07.2018

Suggested to propose data collection methods along with a labour force survey to measure progress for indicators whose data is not available. Scheme mapping should be done for all the departments which are part of the economic growth

Sixth Meeting: 06.09.2018

The presented approach paper for a macro-economic conceptual growth model will be added to action plan as a suggestive way forward for inclusive and sustainable growth in the state. Census

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analysis will be done to identify urban agglomerations. Letter to be sent from planning department to all departments for scheme mapping

Seventh Meeting: 11.10.2018

Rationale followed for scheme mapping and for finalization of targets and indicators to be added in the report. Linking of schemes to targets and indicators to be done. A monitoring and reporting structure along with a prescription for MIS should be suggested in the report.

Eight Meeting: 18.02.2019

The time series data for the available indicators along with the time series data of GSDP data to be used by the committee to finalise the targets. Priority indicators suggested by NITI Aayog would be retained and used for SDG 8.

Ninth Meeting: 29.03.2019

The macro-economic approach and the actionable interventions that could be considered by the state government were presented to the committee. After discussions the broad contours of the action plan and a set of recommendations were approved by the committee.

Tenth Meeting: 25.07.2019

The draft report of the Committee circulated to the members in advance was presented in a PPT to the committee members and the invitees. After deliberations, changes in the report and in the recommendations were recorded. The final draft report of the Committee was approved. The Chairman was authorised to submit the final report to the Government after incorporating the changes proposed.

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Annexure 2 Rationale for retaining/ introducing/removing the targets or indicators The following is a detailed list of the targets and indicators under SDG 8 mentioning alongside the re drafted and removed targets/indicators if any with rationale adopted for the same. Target 8.1 - Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries

• Indicator 8.1.2: Annual growth rate of real GDP The indicator is being included in the target with the aim to monitor the growth rate of real GDP along with growth rate of real GDP per capita.

Target 8.2 - Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors

• Indicator 8.2.1: Annual growth rate of GDP per employed person • Indicator 8.2.2: Total number of patent issued • Indicator 8.2.3: Annual growth in manufacturing sector • Indicator 8.2.4: Annual growth in agriculture sector These indicators were re-drafted and the following indicators were introduced to monitor the progress for the attainment of the Target 8.2.

• Indicator 8.2.1.1: Annual growth in Agriculture sector • Indicator 8.2.1.1: Annual growth in Manufacturing sector • Indicator 8.2.1.1: Annual growth in Service sector • Indicator 8.2.2: Annual Growth of Total Factor Productivity of GSDP • Indicator 8.2.3.1: Per capita Annual growth in agriculture and allied sector • Indicator 8.2.3.2: Per capita Annual growth in manufacturing sector • Indicator 8.2.3.3: Per capita Annual growth in service sector • Indicator 8.2.4.1: Percentage Share of agriculture and allied in GSDP • Indicator 8.2.4.2: Percentage Share of manufacturing in GSDP • Indicator 8.2.4.3: Percentage Share of service sector in GSDP These indicators will monitor the sectoral growth in each sector in the State. The indicators of percentage share in the sectors are kept to evaluate the change in sectoral composition in the State. The main objective will be to improve the agriculture and manufacturing sector in the State, however, the services sector will be monitored for comparison.

Target 8.3 - Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services • Indicator 8.3.1: Proportion of unorganised employment in non-agricultural sectors • Indicator 8.3.2: Coverage under ESI and EPS • Indicator 8.3.3: Coverage of NPS

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• Indicator 8.3.4: No. of MSME units registered under the online Udyog Aadhar registration for entrepreneurship • Indicator 8.3.5: Number of ventures set up under Start-up India • Indicator 8.3.6: Number of patent issued • Indicator 8.3.7: Growth of registered micro, small and medium size enterprises • Indicator 8.3.8: Total loans outstanding to micro, small and medium enterprises • Indicator 8.3.9: Outstanding credit to Micro, Small and Medium Enterprises These indicators were re-drafted and the following indicators were introduced to monitor the progress for the attainment of the Target 8.3. It was opined that there was no need to monitor so many indicators for the target and the same can be evaluated using the following indicators:

• Indicator 8.3.1: Growth of organized workforce in non- agricultural sectors • Indicator 8.3.2: Annual Growth of registered micro, small and medium size enterprises • Indicator 8.3.3: Increase in turnover of registered MSME These indicators will help in monitoring the growth of micro, small and medium size enterprises in the state which is the main aim of the Target 8.3. The indicators will take care of the employment and the turnover of the registered MSME which will provide the required evaluation for the growth of MSME in the State. Target 8.4 - Improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation, in accordance with the 10-year framework of programmes on sustainable consumption and production, with developed countries taking the lead The target was opined to be removed as the issues pertaining to this are being closely dealt in Goal 7: “Ensure access to affordable, reliable, sustainable and modern energy for all”. Target 8.5 - By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value • Indicator 8.5.1: Unemployment rate • Indicator 8.5.2: Workforce participation Ratio • Indicator 8.5.3: Wages earned by male-female in regular / casual employment • Indicator 8.5.4: Number of employed persons with disabilities in public services • Indicator 8.5.5: Total population with disabilities covered under social protection schemes • Indicator 8.5.6: Share of unemployed persons in population aged 15-24 (percentage) Indicators 8.5.4, 8.5.5 and 8.5.6 were removed with the aim to reduce the number of indicators for monitoring the target. It was found just to retain the indicators 8.5.1, 8.5.2 and 8.5.3 which were directly impacting the attainment of the Target 8.5. Target 8.6 - By 2020, substantially reduce the proportion of youth not in employment, education or training • Indicator 8.6.1: Unemployment Rate (15-24 years) • Indicator 8.6.2: Proportion of youth (15-24 years) not in education, employment or training (NEET)

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• Indicator 8.6.3: No of youth certified in short term and long-term training schemes / no of youth in district in age group 15-29 • Indicator 8.6.4: No of certified youth employed / No of youth trained under short term and long-term training • Indicator 8.6.5: Number of apprentices completing/Total number of trainees registered on the portal • Indicator 8.6.6: No of people certified under Recognition of Prior learning / non-formally skilled workforce

Indicator 8.6.1. was removed as the same is being monitored in Target 8.5 and a new indicator was re-drafted as “Share of unemployed persons in population aged 15-35 (percentage)”. Indicator 8.6.2 was retained. Indicators 8.6.3, 8.6.4, 8.6.5 and 8.6.6 as the data for the same is not available for the State, available only for the backward districts. Also, they do not directly contribute for the attainment of the Target. Target 8.7 - Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms • Indicator 8.7.1: Total crimes relating to human trafficking • Indicator 8.7.1: Number of missing children • Indicator 8.7.1: Number of working children in age group of 5-14 years The indicators are removed and the following new indicators are introduced which focus on the issue of child labour which is the core aim of the target. Hence, the same will be monitored and evaluated to ensure the attainment of the Target 8.7. • Indicator 8.7.1: No. of reported cases of child labour in the age group 5-14 as a proportion of total child population • Indicator 8.7.2: No. of reported cases of forced labour as a proportion of total working population

Target 8.8 - Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment • Indicator 8.8.1: Number/ proportion of workers covered under Employees State Insurance ESI Act • Indicator 8.8.1: Number of migrant workers • Indicator 8.8.1: Number of accidents in workplace • Indicator 8.8.1: Employment generated under Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) • Indicator 8.8.1: Number of minimum wages schedules notified • Indicator 8.8.1: Number of gratuity claims received • Indicator 8.8.1: Number of Maternity claims received of contract labour These indicators were re-drafted and the following indicators were introduced to monitor the progress for the attainment of the Target 8.8. It was opined that there was no need to monitor so many indicators for the target and the same can be evaluated using the following indicators:

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• Indicator 8.8.1: Number/ proportion of workers covered under Social Protection schemes and Acts • Indicator 8.8.2: No. of Cases reported and prosecuted under Sec 28 of Inter-state migrant workers Act • Indicator 8.8.3: No of cases filed and prosecuted under Section 88 and 88A of the Factories Act.

Target 8.9 - By 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products The target was opined to be removed as the Tourism sector is not being focused. The main aim of the Goal is to increase employment and it is opined that in the State of Karnataka, the employment can be generated through manufacturing sector. Target 8.10 - Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all • Indicator 8.10.1. Indicator on Financial Inclusion • Indicator 8.10.2: Proportion of population having bank accounts • Indicator 8.10.3: Number of banking outlets per 1,00,000 population • Indicator 8.10.4: Automated Teller Machines (ATMs) per 1,00,000 population • Indicator 8.10.5: No of accounts with Nil/1-5/more than 5 transactions These indicators were re-drafted and the following indicators were introduced to monitor the progress for the attainment of the Target 8.10. It was opined that there was no need to monitor so many indicators for the target and the same can be evaluated using the following indicators: • Indicator 8.10.1: Proportion of adult population having bank accounts • Indicator 8.10.2: No. of ATMs per geographical area wise Target 8.A - Increase Aid for Trade support for developing countries, in particular least developed countries, including through the Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries It is opined to remove this target as the issue in the target is not relevant to the State of Karnataka. As the same cannot be implemented by the State, hence the same cannot be monitored. Target 8.B - By 2020, develop and operationalize a global strategy for youth employment and implement the Global Jobs Pact of the International Labour Organisation It is opined to remove this target as the issue in the target is not relevant to the State of Karnataka. As the same cannot be implemented by the State, hence the same cannot be monitored.

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Annexure 3: State Matrix for SDG 8 Reporti Tentativ ng year e data Sub- of Indicat sources Latest Nodal indicators Latest or Indicat Availabilit (Reports Indicator Goals Targets Departme Indicators suggested Indicat value Target for SDGs or No y (Yes/No) , value nt by or for website, available committee value 2016 Comments hand availab , if any books) le All State State India Target Target Target for 2022 for 2030 for 2030 Goal 8: 8.1 - Sustain DES 8.1.1 Annual Yes 8.51 9.60 Excerc The Promote per capita growth rate ise disaggrega sustained economic of real GDP done at ted data , inclusive growth in per capita state for the and accordance (at constant level GSDP sustainab with national prices of only provided le circumstance 2011-12) by the 6.3 economic s and, in 2016- Planning 2016- growth, particular, at 17 over Departme NA 6.3 17 over full and least 7 per 2015- nt and the 2015- productiv cent gross 16 targets are e domestic 16 set based employm product on the ent and growth per analysis of decent annum in the the same. work for least all developed countries

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DES 8.1.2 Annual This will growth rate 7.49 be a 2016- Excerc of real GDP 2016- derived 17 over ise NA Yes 7.49 17 over 9 10 figure 2015- done at 2015- from 16 state 16 level indicator only 8.1.1. 8.2 - Achieve DES 8.2.1 Annual 5.7 The 2017- higher levels growth in 2016- disaggrega 18 over of economic Agriculture Yes 4.9 17 over 3.34 4.65 ted data 2016- productivity sector 2015- for the 17 through 16 GSDP diversificatio DES Annual provided 3.7 n, growth in 2017- by the 2016- technological Industries 18 over Planning Yes 4.9 17 over 6.33 7.48 upgrading sector 2016- Departme and 2015- nt and the Annual 17 innovation, 16 targets are growth in including set based DES sector Annual through a on the growth in focus on analysis of service high-value 8.9 the same. sector 2017- added and 2016- Data from 18 over labour- Yes 10.4 17 over 9.5 10.38 Excerc 2011-12 2016- intensive 2015- ise upto 17- 17 sectors 16 done at 18, state variation level needs to only be seen. DES and 8.2.2 Annual Guruchura Sub Growth of n Sir Committe Total Factor No needs to e Productivit talk to y of GSDP Amalan Sir viii

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on this formulae.

Per capita The Annual disaggrega growth in 2017- 18030.5 18325.3 27608.2 ted data Yes 19161.32 agriculture 18 8 3 2 for the and allied GSDP sector provided Per capita by the Annual Planning 2017- 35881.5 60023.2 108812. growth in Yes 38427.30 Departme 18 5 7 85 industries nt and the sector targets are Excerci Per capita set based se DES and Sector wise Annual on the done Sub per capita growth in analysis of 8.2.3 at Committe Annual service the same. state e growth rate sector This will level show only which sub- sector has 114964.0 2017- 102473. 337365. Yes 161889 the most 7 18 71 4 variation. Data from 2011-12 upto 17- 18, variation needs to be seen.

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Sector wise Percentage The percentage Share of disaggrega 11.10461 2017- 11.0029 10.1527 share in agriculture Yes 6.88 ted data 814 18 994 829 SGDP and allied for the (capturing in GSDP GSDP contributio Percentage provided n of sector Share in 22.26989 2017- 26.4120 25.1951 by the Yes 22.25 to GSDP) Industries 395 18 355 105 Planning in GSDP Departme Percentage nt and the Share of targets are Excerci service set based se sector in on the done GSDP analysis of DES 8.2.4 at the same. state This will level show only which sub- 66.62548 2017- 62.5849 64.6521 Yes 58.93 sector has 791 18 648 066 the most variation. Data from 2011-12 upto 17- 18, variation needs to be seen. 8.3 - Promote LABOUR 8.3.1 Growth of Survey development organized Proposed -oriented workforce Targets cannot be set for the No policies that in non- indicator support agricultural productive sectors x

Report of the SDG 8 Committee activities, COMMER 8.3.2 Annual MSMEs decent job CE & Growth of departme creation, INDUSTRIE registered nt needs entrepreneur S micro, to give the ship, small and data on creativity and medium Online proportio innovation, size registrat 2017- n of Yes 23.77 52.67 Requires discussion and enterprises ion 18 registered encourage website MSMEs the and formalization MSMEs and growth who have of micro-, availed small- and benefits. medium- COMMER 8.3.3 Increase in MSMEs sized CE & turnover of and enterprises, INDUSTRIE registered unorganiz including S MSME ed labour through survey has access to been financial proposed services Targets cannot be set for the for No indicator collection of basic data. (especially for the identified growth centers. 8.5 - By 2030, DES 8.5.1 Unemploy Male Latest 12 10 14.83 This target achieve full ment rate Unemploy NSSO is set by No and ment rate 68th the productive round planning xi

Report of the SDG 8 Committee employment (Report dept. and decent 554) The work for all CNN- committe women and DES had e's men, also decision including for conduct was that young people ed a Target and persons sample cannot be with survey. set for the disabilities, indicator and equal pay DES Female Survey Targets cannot be set for the for work of Unemploy No Proposed indicator equal value ment rate DES 8.5.2 Workforce Male participatio Workforce No n Ratio participatio n Ratio NSSO Targets cannot be set for the Survey DES Female data indicator Proposed Workforce No participatio n Ratio LABOUR, 8.5.3 Wages Survey RDPR earned by Proposed male- Targets cannot be set for the No female in indicator employmen t 8.6 - By 2020, LABOUR 8.6.1 Share of Survey substantially DEPARTM unemploye Proposed reduce the ENT d persons Targets cannot be set for the No proportion of in indicator youth not in population employment, aged 15-35

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Report of the SDG 8 Committee education or (percentag training e)

LABOUR 8.6.2 Proportion Survey DEPARTM of youth Proposed ENT (15-35 years) not Targets cannot be set for the in No indicator education, employmen t or training (NEET) 8.7 - Take LABOUR 8.7.1 No. of Child immediate DEPARTM reported Labour and effective ENT cases of (Prohibition Yes 82 2017 0 0 measures to child labour and eradicate in the age regulation The forced group 5-14 Act 1986 targets set labour, end as a Forced or for 2022 modern proportion bonded and 2030 Yes 11 2017 0 0 slavery and of total labour should be human child system 0 as there trafficking population Juvenile should be and secure Justice Act Yes 45 2017 0 0 no the tolerance prohibition POSCO and elimination of Yes 1708 2017 0 0 the worst

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Report of the SDG 8 Committee forms of child 8.7.2. No. of No of labour, reported reported The including cases of labour Yes 3 2017 0 0 targets set recruitment forced manual for 2022 and use of labour as a scavenging and 2030 child soldiers, prorportion or death should be and by 2025 of total No of 0 as there end child working reported should be labour in all population cases of Yes 214 2017 0 0 no its forms forced tolerance human trafficking. 8.8 - Protect HOME 8.8.1 Number/ 8.8.1.1: Treasury/ labour rights Labour proportion Number/ DPR and promote of workers proportion departme safe and covered of workers nt will be Yes.Gende secure under covered able to r working Socisl under give the disaggrega environments Protection EPFO/ data. tion not for all schemes NPS/EPS We can available. workers, and Acts (Disaggrega also check including ted by in Finance migrant Gender) departme workers, in nt particular LABOUR 8.8.1.2: The data women DEPARTM Number/ needs to migrants, and ENT proportion be those in of workers reviewed. precarious covered 30.73 2017- 23.85 The Yes Requires discussion employment under Lakshs 18 Lakhs indicator Employees will be State reviewed Insurance by Sir ESI Act to xiv

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total workers in Factory Act and Shops Act

LABOUR 8.8.2 No. of The data DEPARTM Cases and the ENT reported indicator and will be prosecuted 2017- retained Yes 9 15 Requires discussion under Sec 18 28 of Inter- state migrant workers Act LABOUR 8.8.3 No of cases ADD - No. The DEPARTM filed and of accidents indicator ENT prosecuted reported should be under per million checked Section 88 mandays with and 88A of workers Constructi the on Board Factories 2017- on the Yes 0.1139 0.1283 Requires discussion Act. 18 number of accidents. If the figure is received, then we shall change

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this indicator.

8.10 - LABOUR 8.10.1 Percentage 100 100 100 The Strengthen DEPARTM of indicator the capacity ENT households has been of domestic with a Bank changed financial account to the institutions to indicator encourage from the and expand NITI Aayog 2017- access to Yes 99.99 priority 18 banking, dasboard insurance and the and financial target is services for based on all the principle of 100% coverage. RBI 8.10.2 No. of 35 50.95 50.95 The target ATMs per is fixed by lakh the state population not by the taluk wise committe RBI 2017- Yes 24.37 e. The Website 18 data is available for the State not taluk wise.

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Annexure 4: SDGs Dash Board

SDG Dashboard Sl. SDG Priority Value State updates as on 2018-19 Availability of Data Target for SDGs No Goals Indicators as per Sources Base Base Periodicity Disaggregated Department website Contact Person in the State State All Remark NITI Value of data Line Line of Data data (District (Y/N) (If Y Website Department Target Target India Aayog as year Value wise/ address) for for Target SDG per Talukwise/ 2022 2030 for Index the Institutionwise) 2030 base State Line Report, 2018 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 36 Annual 6.35 8.40 DES 2011- 8.40 Annual State Level Yes JD SIP 9 10 10 growth rate of 12 District wise, des.kar.nic.in (M): 9449111724 GDP per capita (at constant prices of 2011-12) 37 Average 16.50 16.00 NSSO 2015- 16.00 Annual State Level Yes Narayanappa 12 10 14.83 unemployment 68th 16 des.kar.nic.in (M): 9481773809 rate per 1000 round Goal persons for 8 males and females 38 Percentage of 99.97 99.99 SLBC 2017- 99.99 Quarterly State Level, SLBC - Website Sri.Karunakara 100 100 100 households 18 District wise http://slbckarnataka.com Genral Manager with a Bank (M): 9449860289 account 39 Number of 26.22 24.37 SLBC 2017- 24.37 Quarterly District wise SLBC - Website Sri.Karunakara 35 50.95 50.95 ATMs per 18 http://slbckarnataka.com Genral Manager 1,00,000 (M): 9449860289 population

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Annexure 5: SDG 8 Implementation MIS Framework “Achieving the right policies requires the management of trade-offs informed by good statistics”

- 2004 Trevor Manual13

The shift from MDGs to SDGs has coincided with the big data revolution posing great opportunities for not just more and better data but also getting creative in collecting, managing and linking data for analytics (Webster & Ravnborg, 2016). The monitoring of the implementation of SDG 8 will require a strong and rigorous framework but also a comprehensive one given the complex inter-se relationship - complementary, but potentially competing and sometimes conflicting - between economic growth, equity, and decent work within the goal. The SDG 8 monitoring vision should ensure that ‘Never again should it be necessary to say “we didn’t know”. No one should be invisible. This is the world we want – a world that counts,’ (IEAG, 2014) and recognises the need for more accurate, reliable, timely and comparable datasets. The report ‘A World that Counts’ identifies two global and overarching challenges with reference to the current state of data for SDG monitoring: • Challenge of invisibility – gaps in what we know from data, and when we find out. • Challenge of inequality – gaps between those with and without information, and what they need to know make their own decisions.

Apart from addressing the above-mentioned gaps, monitoring of the progress towards the SDGs using a data base framework will also help increase accountability which requires greater transparency and more inclusive access to information. The need for a robust and reliable Monitoring and Information System (MIS) arises owing to the following: • Multiplicity of goals, targets and indicators and various datasets to measure the progress on each • Need to organise and manage data effectively across various platforms and departments • Assess the real time impacts of the efforts put in by the committees and the departments. Thus, the SDG 8 committee proposes that a SDG Centre be established under Planning department for coordinating all the activities within departments for achieving the SDGs and their identified targets; strengthening the capacity in the departments concerned for effective implementation of SDGs; and to build capacity of the Centre for monitoring, evaluating, and resource allocation. The cell Centre should be commandeered by the Planning Secretary. The responsibilities of the SDG Centre can be broadly categorised into the following: 1. State Level Online Dashboard

The foremost task of the Centre for the monitoring of SDG progress will be to develop a State Level Online dashboard. The Centre should develop a dashboard which will integrate relevant secondary and primary data from the different departments and other recurring external data sources like Census, National Family Health Survey, datasets by NSSO, etc. to monitor the overall progress of the SDGs and track SDG indicators related to government schemes. The dashboard should also map

13 South Africa’s Finance Minister (1996- 2009) and Minister in the Presidency for the National Planning Commission (2009-14)

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flagship programmes set against the set of SDG indicators that have an impact on the targets and indicators set under each SDG. Efforts should be towards developing a meaningful, reliable and robust monitoring system that allows for measurement of trends, comparison of progress over time, across various geographies, and various administrative levels. Standardised data collection and management, and well-defined standards and processes to achieve those standards should be established, with clear definitions and measurements, and regular and consistent collection of data. Much data within various departments still remains fragmented and the recognition of inter-linkages and Inter-sector coordination for data and schemes between departments inadequate. Before developing the dashboard, the existing MIS of all the departments will need to be understood and streamlined to provide the primary source of data input to the central SDG dashboard. Efforts to understand the functional status of existing data collection, MIS system, periodicity etc. of various departments will be required. Even the administrative data collected by sector ministries and departments at sub-state levels hold considerable potential when linked. The SDG cell must address this need and identify ways of facilitating and increasing coordination and exchange of the following types of datasets across sectors and levels of government. I. Survey II. Census III. Administrative IV. Geo Spatial Data V. Unofficial-by private organisations, NGOs, etc.

2. Training and Capacity Building

The Centre should take initiatives in organising SDGs related training and capacity building programmes for different stakeholders of the State’s SDG initiative. A series of capacity building trainings for government officials from various departments can be undertaken. The trainings should focus on: I. Understanding SDGs II. Contextualising SDGs in Karnataka III. Policy planning for SDGs in Karnataka IV. Developing mechanisms for successful implementation, monitoring, and evaluation of the implementation of the SDGs in Karnataka

3. Prepare Annual Progress Report on the SDGs

The Centre should be given the responsibility of preparing an annual effectiveness evaluation progress report on SDG implementation in close consultation with the planning department. The report should provide a track of the relevant components for each scheme/programme and outlay against the Karnataka Vision 2030 Document and the relevant SDG targets to these schemes/programmes. Based on this, the planning department will be able to, in consultation with the Finance Department, undertake outcome-based budgeting for upcoming financial years.

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4. State level SDG Monitoring Committee/SDGs Strategy Support Group

The Centre can benefit immensely from a strategy support group that can provide it with strategic and operational guidance. The strategy support group should be stakeholder-representative and comprise academics, think tanks, community-based organisations, domain experts, and officers passionate about implementation of SDGs, cutting across departments and their formal responsibilities. The SDG 8 Committee will be happy to assist in establishing and operationalising such a centre. Public Affairs Centre has provided pro-bono support to the SDG 8 committee and will be happy to continue providing this support.

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