Maharashtra has toppled Gujarat as the most sought after destination for global and domestic investors as the latter recorded least growth rate of just over two per cent amid top 21 states across India during the course of past five years, revealed a recently concluded study by apex industry body ASSOCHAM.
“Maharashtra, Gujarat and Odisha have emerged as most lucrative investment destinations as they together account for over one-fourth share (26.6 per cent) in the total outstanding investments worth over Rs 154 lakh crore attracted by various sectors from both public and private sources across major 21 states in India as on December 2014 which grew from Rs 105 lakh crore as on December 2009,” noted the study titled ‘A Comparative Analysis of Investment Pattern in States,’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
“With a share of about 10 per cent, Maharashtra has ranked on top attracting investments worth over Rs 15 lakh crore as on December 2014 closely followed by Gujarat (9.2 per cent share), while Odisha (7.5 per cent), Karnataka (6.8 per cent) and Tamil Nadu (6.5 per cent) are other states with significant share in this regard,” highlighted the study prepared by the ASSOCHAM Economic Research Bureau (AERB).
“Investment is the key driver of productivity and sustainability that leads to development and growth making most state governments to strive to better the investment climate prevailing in their respective states to make them conducive to attract domestic and foreign investors,” said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the chamber’s study.
With investments worth over Rs 84.5 lakh crore, private sector accounted for almost 55 per cent share in total investments attracted by major 21 states across India. While investments attracted from public sector grew at a compounded annual growth rate (CAGR) of just over 11 per cent, those from private sector grew at just about five per cent during the five year period of December 2009-December 2014.
Private sector accounted for highest share of over 81 per cent in the total outstanding investments attracted by Haryana. While in Gujarat private sector accounted for 74 per cent share in total investments attracted by the state as on December 2014.
Infrastructure sector accounted for lion’s share of 64 per cent in terms of total investments made by public and private sectors (both foreign and domestic) across India followed by manufacturing (20 per cent), construction (9.5 per cent), mining (3.5 per cent) and irrigation (three per cent).
Similarly in Gujarat, infrastructure accounted for highest share of 57 per cent in total investments attracted by the western state followed by manufacturing (25 per cent), construction (13 per cent), mining (three per cent) and irrigation (two per cent) as on December 2014.
With a share of 11.5 per cent and 10 per cent, Gujarat had attracted third highest share in investments attracted by manufacturing and construction & real estate sector across India, while the state attracted fourth highest share of about eight per cent share in infrastructure sector investments.
Interestingly, share of manufacturing sector had increased by five per cent in the total investments attracted by Gujarat as on December 2009 (20 per cent). While the share of infrastructure and mining both had increased by about two per cent respectively, the share of construction and irrigation sectors had declined by six per cent and three per cent respectively, highlighted the ASSOCHAM study.
Projects with investments worth over Rs 86.5 lakh crore i.e. over 56 per cent of the total investments were under implementation or remained non-starter as on December 2014 and private sector accounted for major share (51.5 per cent) in this regard.
Maharashtra had maximum share of over 10 per cent in projects under implementation followed by Karnataka (7.4 per cent), Gujarat (7.4 per cent), Odisha (seven per cent) and Tamil Nadu (6.5 per cent).
Public sector accounted for 56 per cent share in projects that remained non-starter in Gujarat as on December 2014 which had increased from 50 per cent in 2009.
Long delays in implementation of investment projects hurts the sentiment of investors and also results in incurring of huge costs as such the government needs to have a strong plan and must prioritize cleaning up delayed projects in the form of effective implementation which would only be possible through an appropriate, target-oriented roadmap for both the clearance authority and the investors, suggested the ASSOCHAM study.
“The government needs to limit the time frame for each clearance authority and if they are unable to meet the deadline, they should be penalized,” the report said.
Inappropriate planning, change of ownership, lack of finance, lack of co-ordinance with the contractors and others have also resulted in delay in implementation which calls for strict monitoring of such activities in an appropriate manner, it added.