Gujarat is top investment destination :ASSOCHAM

With 1,445 live investment projects worth Rs 13.4 lakh crore, Gujarat has emerged among the top preferred investment destination in recent years, says a study by The Associated Chambers of Commerce and Industry of India (ASSOCHAM). The power sector has got the major share of 40.2 per cent followed by manufacturing (24.9 per cent), services (16.8 per cent) and real estate (11.4 per cent). The study titled ‘Sustained Balanced Growth in Gujarat said that close to 70 per cent of these investments were in districts of Kutch, Jamnagar, Ahmedabad, Bharuch, Surat and Bhavnagar. However, projects involving 63 per cent of total investments were in the announcement stages and the value of projects actually implemented account for 35.2 per cent of total investments. As a majority of new investments involve high-cost projects, cost and time over-runs can throw their management haywire and make completion unpredictable, the study says. The study also says that adequate long-term finance is not being made available to small and medium industries by banks. The Small Industries Development Bank of India (SIDBI) and state finance corporations are lending to small firms for projects involving up to Rs 10 crore outlay on plant and machinery. Large firms are raising money from the bond market. In this backdrop, ASSOCHAM suggests that state-level development finance institutes be revived to help small and medium enterprises. The study has identified engineering, biotechnology, food processing, agriculture, gems and jewellery that can make Gujarat a hub for research and development. While metro trains are now being made near Vadodara, the state is yet to create metro and rail transport services system, the study says. The state’s economy grew at a compounded rate of 10.2 per cent between 2000-01 and 2009-10. This is exceptional and much higher than what other progressive states in the country achieved during the same period, the study says. The study also mentions the state’s inability to make proper cost recoveries from public services provided and to generate adequate returns from public investments. In agriculture sector – which accounts for 11.7 per cent of the GSDP – investments in irrigation need a further boost. The services sector’s contribution to the GSDP is to the tune of 47 per cent while that of the industrial sector is a little over 40 per cent. Manufacturing is the dominant industrial activity.