Gujarat appears to have arisen as the most favored objective for setting up projects by private corporate organizations as the state pulled in the greatest number of ventures authorized by banks and monetary foundations during the five-year time frame from 2016-17 to 2020-21.
At 14.7%, Gujarat grabbed the highest percentage share of the sanctioned projects during the quinquennial period. Gujarat was followed by Maharashtra (12.1% share in sanctioned projects), Karnataka (9.5%), Andhra Pradesh (8.8%) and Tamil Nadu (7.2%), states the Reserve Bank of India (RBI)’s recent report on the private corporate investment.
“Data for the past five years (2016-17 to 2020-21) revealed that more than half (52.3%) of the projects were set up in five states, viz. Gujarat, Maharashtra, Karnataka, Andhra Pradesh, and Tamil Nadu,” points out the report, which enumerates raw materials, availability of labour, adequate infrastructure, market size, and growth prospects as the deciding factors for locating a project.As many as 330 projects, excluding those spread over several states/union territories, were sanctioned in Gujarat during fiscal 2017 to 2021. The total number across India stood at 1,975. For analysis, the report excluded investment projects smaller than Rs 10 crore as well as projects with private ownership below 51% or undertaken by trusts, governments, and educational institutions.
“I believe that Gujarat is India’s business hotspot, with high prospects for industry and commerce. It has a conducive ecosystem, be it business or social,” said Jaimin Shah, co-chair, Assocham Gujarat.
There are many benefits for existing and new investors. Within coming investors, there comes a high sense of competitiveness in Gujarat. Also, trade and commerce will be enhanced with incoming investments, making it truly aatmanirbhar,” he added.
In fact, Gujarat’s share of the sanctioned projects has gone up as the state had attracted 10% of such projects during 2011-12 to 2015-16, the report further adds. Not just the number of projects, Gujarat also received a lion’s share in total cost of projects sanctioned. According to the report, in 2020-21, Gujarat and Rajasthan each accounted for the highest share (17.1%) in the total cost of projects sanctioned by banks and financial institutions followed by Andhra Pradesh (15%), Uttar Pradesh (13.7%), Maharashtra(8.5%), Haryana (7.8%), Karnataka (6.1%).
The report, however, stated that overall investment climate remained subdued across the country for the large part of 2020-21 due to Covid pandemic. “In all, banks and FIs sanctioned only 220 project proposals of private companies in 2020-21, a record low in recent years. The total cost of projects sanctioned too declined sharply to Rs 75,558 crore in 2020-21 from Rs 1,75,830crore in 2019-20.”
