Five guarantees will boost economic growth in short run, says Mid Year Review of State Finances in Karnataka

Congress MLAs, during the Legislative Assembly session at Suvarna Vidhana Soudha in Belagavi. | Photo Credit: The Hindu

It is expected that the five guarantee schemes would not only lead to distributive justice but also boost the economic growth of the State in the short run by increasing consumption, according to the Mid Year Review of State finances 2023-24 that was tabled in the Assembly on December 14.

However, with necessary structural reforms and enhanced Ease of Doing Business coupled with higher capital expenditure, the State is expected to maintain a high growth trajectory in the long run, the report observes.

Karnataka’s model of development which includes guarantee schemes is positively influencing the State economy and is contributing to the increase in the GSDP. The guarantee schemes aim to support the underprivileged with monetary support, increasing their purchasing power and boosting economic activity that will in-turn lead to economic growth, the MYR states.

The guarantee schemes would have a multiplier effect on the local economy and thereby boost the consumer spending and revenue of the state as most of the households covered under these schemes belong to poor/lower middle-income sections who have higher propensity to consume, says the review

The guarantee of free bus travel is expected to improve the participation of women in the labour force and thereby boost the income of the households as well as economy, which also includes the impact on tourism, the review says.