Karnataka Bleeds Jobs While Leaders Fight for Power

As neighboring Tamil Nadu and Andhra Pradesh surge ahead, Karnataka's leadership deadlock threatens its economic powerhouse status.

The corridors of power in Bengaluru are witnessing an unprecedented drama that goes far beyond mere political posturing. As Chief Minister Siddaramaiah and Deputy Chief Minister DK Shivakumar engage in a protracted power struggle, Karnataka's reputation as India's industrial crown jewel is quietly crumbling. While the two leaders presented a unified front on November 29, 2025, claiming their rift is merely "opposition propaganda," the damage to investor confidence and the state's competitive edge has already been done.

The numbers tell a sobering story. According to recent government data, Karnataka has managed to implement only about 31 percent of the major projects approved between 2018 and 2023. Of 122 approved projects worth Rs 4.29 lakh crore that promised employment for 3.52 lakh people, merely 38 have materialized on the ground. This dismal conversion rate stands in stark contrast to the aggressive investment drives being mounted by neighboring states.

The Southern States Race: Karnataka Falling Behind

While Karnataka grapples with internal political turmoil, both Tamil Nadu and Andhra Pradesh have emerged as formidable competitors in the race for industrial investments. The contrast couldn't be starker. Tamil Nadu, despite its own challenges, maintained a robust GSDP growth rate exceeding 9 percent, while Andhra Pradesh under Chief Minister N. Chandrababu Naidu has adopted what industry observers call a "ruthless, business-focused approach."

The Google data center deal that went to Vizag instead of Karnataka serves as a painful reminder of opportunities lost. Similarly, the Hwaseung footwear manufacturing project, which promised 20,000 jobs, shifted to Kuppam in Andhra Pradesh. These aren't just isolated incidents—they represent a pattern of Karnataka losing its competitive edge while political leaders remain preoccupied with power-sharing arrangements.

Karnataka's per capita income, while still impressive at Rs 3.81 lakh for 2024-25, is being chased down aggressively by its neighbors. Tamil Nadu leads southern states with a GSDP growth rate of 9.69 percent, followed by Andhra Pradesh at 8.21 percent, while Karnataka trails at 7.37 percent. For a state that accounts for over 40 percent of India's unicorns and hosts the country's premier IT hub, these are worrying trends.

The Political Circus and Its Real-World Costs

The ongoing tussle between Siddaramaiah and Shivakumar has moved beyond backroom negotiations to public disagreements that undermine governance. Recent surveys reveal a troubling picture: public satisfaction with the Karnataka government has plummeted from 30.3 percent in January 2024 to just 26.9 percent in November 2024, while dissatisfaction has risen from 39 percent to 42 percent.

The alleged power-sharing agreement—supposedly promising Shivakumar the Chief Minister's post after two and a half years—has created uncertainty that investors abhor. In July 2025, Shivakumar embarked on a week-long temple tour visiting prominent mutts and spiritual leaders, with supporters openly proclaiming him as the "next Chief Minister." Such displays, while perhaps intended to build political capital, send confusing signals to the business community about who's actually in charge.

The Spiritual Leaders Factor: Adding Complexity to Chaos

The involvement of spiritual leaders and religious institutions in Karnataka's political maneuvering adds another layer of complexity that directly impacts governance and investor confidence. The most significant recent development came from the influential Adichunchanagiri Mutt, the spiritual center for the Vokkaliga community that comprises about 11 percent of Karnataka's population. Just two days ago, on November 27, 2025, Sri Nirmalanandanatha Mahaswamiji, the head of Adichunchanagiri Math, openly appealed to the Congress high command to appoint DK Shivakumar as Karnataka's next Chief Minister.

The seer emphasized that while his mutt has always supported all communities, the time has come for Congress to honor its earlier commitment to Shivakumar. He expressed disappointment that the reported two-year power-sharing promise has not been fulfilled, noting that Shivakumar, despite visiting the Math multiple times, never requested political backing. This spiritual endorsement significantly strengthens Shivakumar's political claim at a critical juncture.

Beyond Adichunchanagiri, Shivakumar's week-long temple tour in July 2025 saw him visiting Kodi Math, Jenukal Siddeshwara Temple, and other prominent religious sites across districts. At these venues, supporters openly chanted "Next CM DK Shivakumar" slogans, while seers offered blessings and private audiences. The optics of religious leaders endorsing him carries substantial weight, particularly in rural and Vokkaliga-dominated belts where mutts wield considerable socio-political influence.

However, this blending of spirituality with political ambition, while traditionally significant in Karnataka politics, creates serious governance challenges. When political leaders spend weeks courting religious leaders instead of addressing stalled industrial projects worth Rs 1.50 lakh crore, it sends a troubling message to the business community. As one political observer noted, visiting the same temple that former CM B.S. Yediyurappa visited before taking oath might be symbolically significant, but it doesn't build factories or create jobs. Meanwhile, Tamil Nadu and Andhra Pradesh leaders are focused on investor roadshows and policy implementation.

The Price of Political Instability

The human cost of this political uncertainty is staggering. Four green hydrogen projects worth Rs 1.50 lakh crore remain stalled, awaiting policy formulation. Slow implementation, delays in clearances, corruption allegations, and land acquisition issues continue to plague project execution. Industry leaders point to these systemic failures as reasons why Karnataka, despite attracting Rs 4.27 lakh crore in FDI between October 2019 and December 2024 (second only to Maharashtra), struggles to convert these commitments into actual employment.

The state's Industrial Policy 2024-29, unveiled at the recent Global Investors Meet, promises to create 20 lakh jobs and attract Rs 7.5 lakh crore in investments. However, promises ring hollow when execution remains Karnataka's Achilles heel. The policy's ambitious targets—including a 12 percent annual manufacturing growth rate—require political stability and administrative focus that currently seems absent.

A Wake-Up Call

Karnataka stands at a crossroads. With Tamil Nadu and Andhra Pradesh aggressively courting the same industries and offering competitive incentives, the state cannot afford the luxury of prolonged political uncertainty. The Congress high command's ambiguity over leadership transition, combined with public contradictions between the CM and DCM, creates an environment where investors look elsewhere.

The recent joint breakfast meeting between Siddaramaiah and Shivakumar, followed by their claims of unity, may temporarily calm political waters. However, until both leaders prioritize Karnataka's development over personal ambitions, and until the Congress high command provides clear direction, the state will continue hemorrhaging opportunities to its more focused neighbors.

For a state that pioneered India's IT revolution and houses institutions like ISRO and HAL, the current political drama is not just embarrassing—it's economically devastating. Every day of political uncertainty translates to jobs not created, investments not realized, and dreams deferred for millions of Karnataka's youth waiting for opportunities that increasingly seem to be going elsewhere.

The question isn't whether Karnataka can regain its industrial edge—it's whether its political leadership cares enough to stop fighting each other and start fighting for the state's future.

(Disclaimer: The opinions expressed are solely those of the author and do not reflect the views or stance of the organization. The organization assumes no responsibility for the content shared.)