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Gujarat tops in power sector investments: Study

Rutam Vora Ahmedabad | Updated on July 28, 2014 Published on July 28, 2014

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A recent study report prepared by Assocham’s Economic Research Bureau has showed that Gujarat topped in new investments attracted by the power sector during the period 2004-05 and 2012-13.

The study titled: ‘State-wise analysis of power sector: Consumption, demand & investment’ showed that during the period, Gujarat attracted 17 per cent or Rs 5.3 lakh crore worth of investments out of the total new investments worth over Rs 31.3 lakh crore by power sector (public and private sources) across India.

During 2012-13, out of the total new investments worth over Rs 1,560 crore by the power industry in Gujarat, private sector accounted for 56 per cent.

“Flow of private investments is determined by attractiveness of investment opportunities as they are mostly driven by profitability considerations,” said D S Rawat, national secretary general of Assocham, while releasing the findings of the chamber’s study.

“Bureaucratic efficiency, infrastructure facilities, and ease of land acquisition influence the flow of private investments. Tax concessions, product market conditions and exit policies are effective tools of private investment attraction,” he added.

Also, with investments worth about Rs 22 lakh crore, Gujarat has the highest share (44 per cent) in total outstanding investments worth over Rs 49.5 lakh crore attracted by the power sector across India as of FY 2012-13.

The same was Rs 20 lakh crore in 2004-05, thereby showing a CAGR about 35 per cent. Also, the state's share in the investments has increased from merely seven per cent to 44 per cent during the period.

The report also noted that Gujarat has registered significant improvement in power situation, as the percentage of non-starter projects has reduced from almost half as of 2004-05 to about 29 per cent as of 2012-13.

The Assocham study suggested that the state government should lure private sector investment through a tax incentive scheme and facilitate quicker implementation of pending power projects.

Published on July 28, 2014
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