State of affairs

Maharashtra has bounced back to occupy the top position in investment proposals in FY09, according to an RBI study, displacing Gujarat, which has slipped to the second position. However, going forward, new investments could dip given the economic downturn, the central bank said. According to a study published by RBI, in `08-09, investors favoured Maharashtra the most, with the state capturing 20.6% of the total investment proposals followed by Gujarat, Orissa and Andhra Pradesh. Investment proposals in Maharashtra increased sharply from Rs 3,856 crore (143 projects) in 2007-08 to Rs 87,081 crore (118 projects) in 2008-09. Gujarat slipped to the second position, accounting for 14.2% of the total investment proposals at 78 projects worth Rs 59,997 crore. It had grabbed the maximum share in FY08 (24.8) with investment intentions for 95 projects worth Rs 60,576 crore. Incidentally, both the states managed to attain lead positions around the Assembly elections, when the administrative machinery typically perks up its operations. While Gujarat went to the polls in late 2007, polls are round the corner in Maharashtra. Commenting on the development, Vaijayanti Pandit, director, western region, Ficci, said, “Our studies have shown that the state has benefited in a big way after large multinational auto companies invested in Chakan, around Pune. This has helped attract investments from a lot of auto ancillary units and other businesses. Also, with more and more IT companies coming up, Pune has helped pull investments into the state. “The strong work culture in the state has helped offset barriers like octroi, multiple taxation and other infrastructure bottlenecks like power shortage. Had politicians been more pro-active, the state would have done even better in attracting investments,” Ms Pandit said. Going forward, the slowdown in capital goods production, decline in import of capital goods, emerging indications of excess capacity in some sectors, and weak corporate earnings, especially in the second half of 2008-09, would impact new investments, RBI said in its study. Investments in new projects for FY10 are estimated at Rs 1,78,364 crore, down 33% over the previous year’s levels. These estimates are based on investment intentions by companies that had approached banks and financial institutions for funds in FY09.