In a major setback for the Gujarat government's tall claims about attracting investments, a recent study by the Associated Chambers of Commerce and Industry of India (Assocham) reveals that it recorded the lowest growth among 21 states in luring investments in the past five years.

The study titled ‘A Comparative Analysis of Investment Pattern in States,’ reveals that Maharashtra has toppled Gujarat as the most sought after destination for global and domestic investors.

"Maharashtra, Gujarat and Odisha have emerged as the most lucrative investment destinations as they together account for over one-fourth share (26.6 per cent) of the total outstanding investments of over Rs 154 lakh crore attracted by various sectors from both public and private sources across 21 states as of December 2014."

This grew from Rs 105 lakh crore as in December 2009.

Maharashtra topped with 10 per cent or over Rs 15 lakh crore of the total investment promised as of December 2014, 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) were the other states with significant share,” the study prepared by Assocham's Economic Research Bureau (AERB) said.

“Investment is the key driver of productivity and sustainability that leads to development and growth, making most state governments strive to better their respective investment climate to attract domestic and foreign investors,” said D S Rawat, Secretary-General, Assocham, while releasing the chamber’s study.

The private sector accounted for almost 55 per cent or over Rs 84.5 lakh crore of investments in the 21 states. The private sector grew at just about five per cent during the five-year period from December 2009-December 2014 as against over 11 per cent for the public sector.

The sectoral break-up shows that the infrastructure sector accounted for the lion’s share of 64 per cent in terms of total investments made by the 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).

In Gujarat, infrastructure accounted for the highest share of 57 per cent in total investments, followed by manufacturing (25 per cent), construction (13 per cent), mining (three per cent) and irrigation (two per cent) as on December 2014.

The public sector accounted for 56 per cent share in projects that remained non-starters in Gujarat as of December 2014, up from 50 per cent in 2009.

The report further noted that long delays in implementation of investment projects hurts investor sentiment and results in huge costs. As such the government needs to have a strong plan and must prioritise 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.

Inappropriate planning, change of ownership, lack of finance, lack of co-ordination with contractors and others has also resulted in delay in implementation, which calls for strict monitoring of such activities, the report added.

Related Topics
comment COMMENT NOW