For the second time in a row, Karnataka has topped the list of states in attracting investments. According to the figures released by the Union Ministry of Commerce and Industry, the state, between January and September this year, has received investment proposals worth Rs 1,47,625 crore, which account for 44 per cent of the total such proposals in the country and more than twice the value of proposals received by Gujarat, the state next on the list.
Karnataka topped the list in 2016 as well but its share was lower at 37 per cent. These may be just proposals and many may not even translate into actual investments, but the figures do say something about the business climate in Karnataka.
While its proven track record in nurturing the IT industry is helping Karnataka draw in more investors, proposals have come in for investments in energy, tourism and other sectors as well. There’s much to crow about in these figures, considering that Karnataka was fourth on the list in 2015, but the challenge now is to maintain, and even improve, the business environment.
It’s Brand Bengaluru that’s drawing investors, and that brand has been taking a hit due to infrastructural inadequacies, poor civic standards and bad governance. While the Congress government in the state credits its administrative and economic reforms for the flow of investments, the reality is there’s a long way to go.
Even as the investments have grown, the state has slipped in NITI Aayog’s ease of doing business ranking, from 9th in 2015 to 13th in 2016, which is a cause for concern. Another concern is while investments are coming, most of them are flowing in the direction of Bengaluru, which is already bulging at the seams. The government must ensure that the growth story doesn’t stop with the state capital. Ensuring equitable geographical distribution of investments and bettering the business climate hold key to keeping investment proposals flowing and translating proposals into actual investments.