Where do investments go in Karnataka?

BANGALORE: Is Karnataka slowly turning into a deathbed for investments? Yes, if an Assocham (Associated Chamber of Commerce and Industry of India) strategy paper is to be believed. The Assocha

Published: 22nd April 2012 12:06 AM  |   Last Updated: 16th May 2012 07:41 PM   |  A+A-

BANGALORE: Is Karnataka slowly turning into a deathbed for investments? Yes, if an Assocham (Associated Chamber of Commerce and Industry of India) strategy paper is to be believed. The Assocham has made vivid observations about Karnataka’s live investments in the paper titled ‘Achieving Higher Growth in Karnataka’.

The paper that focuses on achieving higher growth in Karnataka says: “Though the state has successfully attracted investment proposals worth about `10 lakh crore in about 1,624 live projects, 43 per cent of these remain non-starters while some initiative has been taken in 57 per cent of the projects.”

Of 57 per cent projects under implementation, most of them are at MoU (Memorandum of Understanding) stages and a lot more is to be done in facilitating the same. “With a share of over `3.84 lakh crore, manufacturing sector accounted for a lion’s share of 39 per cent of total live investments followed by services (24.6 per cent), real estate (15.2) and electricity (14.1),” says the study.

“Attracting about `9.75 lakh crore, of total investments worth over `137.7 lakh crore, made across the country, Karnataka accounted for 7.1 per cent of total investments made by both government and private sectors in India as on December 2011,” say the Assocham officials. According to the report, the private sector contributed about 55 per cent of the total investments attracted by the state and government sources accounted for the remaining 45 per cent. About the power sector, the Assocham says that it had sought improved power supply to industries, suggesting that the state government focus on low-cost energy generation and developing non-conventional sources of energy like solar, biogas, wind and nuclear sources to increase the power supply.

“Though energy sector has attracted huge investments in the past, the major hurdle is completion and commissioning of these projects to realise their actual benefits. The state government must fix a definite timeline to achieve financial closure and operationalisation of existing projects. Assocham has suggested the state leadership to encourage PPP to leverage the hydropower potential of the state to meet the energy needs. A comprehensive blueprint must be brought out for power sector development,” said J Crasta, Cochairman, Southern Regional Development Council, Assocham.

Assocham further advised that the government maintain a futuristic view while addressing issues like economic slowdown, poor demand in realty sector, a prevailing sense of uncertainty vis-a-vis continuation of fiscal incentives in Direct Tax Code (DTC) regime and Goods and Services Tax (GST) regulations.


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