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Laggard Indian States Attracting More Investors
2008.08.20The geographic spread of investment flows across various states in the country seems to have undergone a change. While some industrially backward states have been successful in attracting more investments, some progressive states are slipping in the ranking list. States like Orissa and Chattisgarh that have been conventionally termed as backward saw a huge spurt in investments in 2007-08.
On the other hand, the big southern states—Andhra Pradesh, Tamil Nadu and Karnataka—that figure in the list of more progressive states have seen a dip in investments.
Though Gujarat continues to occupy the top slot in attracting funds for projects being implemented in the states, it has seen a dip in absolute investment inflows. Maharashtra, a close competitor to Gujarat on industrial ranking, has managed to improve its position
by attracting more funds as well as projects.
These are the findings of a study by the Reserve Bank of India based on close to 1,000 projects, new as well as those undertaking modernisation, expansion and diversification of existing projects, that are relying on funds from banks and financial institutions to finance these projects.
On the face of it, the pattern of development in the country appears to be changing. Or perhaps, these states are pursuing investor-friendly policies to grab a bigger chunk of the investment pie.
This could be true for a few states, but it does not seem to be the case with Orissa or Chattisgarh. Though both have seen a steep jump in investments, the number of projects to which the money has been channelled has not gone up.
Orissa, for instance, has seen industrial investment flowing into the state double from Rs 14,806 crore in FY07 to Rs 30,906 crore in FY08 to its existing 23 projects. In the case of Chattisgarh, money has gone to lesser number of projects. The number of projects in the state has slipped from 13 to 12 in 2007-08.
The region is attracting a lot of investments in the mining sector where projects are very few in number but are very capital intensive and long-term in nature.
As for the southern states, the perception is that policy level focus in recent times has veered more towards populist measures and distributing freebies to select constituencies rather than spending on infrastructure or improving the policy environment.
Regions : Asia
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