CM Bommai Bets on Karnataka Playing a Big Role in $5 Trillion India

Chief ministers as state leaders have to portray a positive image of the state to the people. When Karnataka Chief Minister, Basavaraj Bommai, exuded confidence about Karnataka playing a pivotal role in Indian GDP touching $5 trillion, there was a sense of optimism and a marketing pitch built into it. However, what Bommai says is also substantially justified.

If you look at the IPO markets in the last 6 months, a lot of market cap traction has come from the start-ups. Big names like Paytm, Nykaa, Zomato and Policybazaar have made a substantive contribution to the market cap. Prime Minister Modi himself has expressed confidence that the next phase of Indian growth would be driven by Indian start-ups.

India had around 500 start-ups in the year 2016. Between 2016 and the end of 2021, the numbers of start-ups have burgeoned from 500 to 54,000. That is a phenomenal growth in the start-up scenario in India. Clearly, the start-up culture has unleased a degree of entrepreneurship among Indians, that has not been seen in a very long time.

That is where Karnataka has already played a big role. Out of the 54,000 start-ups currently in India, more than 13,000 start-ups or almost 25% of all Indian start-ups are based out of Karnataka. With a strong eco-system of IT, outsourcing, research institutions and top class educational institutions, Karnataka has emerged as a natural magnet for start-ups. Bengaluru alone has over 150 scientific research institutions, providing the foundation.

India’s GDP currently stands at around $2.7 trillion so if the current real rate of 6-7% is maintained, the GDP should touch $5 trillion by the year 2030. It was originally supposed to reach that mark by 2028, but the targets had to be put off by 2 years due to the lag effect of COVID on the macroeconomy and on Industrial output.

In a way, Bommai is right when he talks about the right ecosystem in Karnataka. The Beyond Bengaluru policy of the Karnataka government has resulted in the benefits of IT proliferation reaching out to other parts of Karnataka too. What exactly has the state done to give a boost to start-ups in India.

According to Bommai, the start-up cell of the Government of Karnataka has already given state aid of up to Rs.220 crore to 450 start-ups in the state. In addition, the state has also designed and implemented focused programs like Elevate-100, Elevate-Unnati, Elevate-75 and Elevate-25 to give a boost to the start-up ecosystem in India. That is likely to be the driving force behind the big Indian GDP leap.