Karnataka sees dip in investments for 2nd year in row

Karnataka is witnessing a huge dip in the flow of investments for the second consecutive year in 2019, which many experts blame on the political instability in the state.

In the first eight months of the current calendar year, the state witnessed a 28.8% dip in the new investment proposals at Rs 56,847 crore. The drop comes on the back of a 44.6% dip in the first eight months of 2018, when the state had seen investment proposals worth Rs 79,866 crore. In 2017, till August-end, the state had seen investments worth Rs 1.44 lakh crore -- an increase of 21% on a year-on-year basis.

In 2018, the state fell short of garnering investment proposals worth Rs 1 lakh crore after a gap of two years, and experts expect the number to further dip this year. The state had garnered proposals worth Rs 90,583 crore during 2018.

Cedes top slot

With this continuous dip in the investment, Karnataka has ceded its much-coveted top slot to the Prime Minister Narendra Modi’s home state of Gujarat, which has seen a healthy rise in the investments over the past few years. In the current year, the total investment proposals attracted by the state have jumped three-fold to a whopping Rs 1.58 lakh crore already, till August. In the first eight months of 2018, the state had seen muted investment proposals compared to the same period in the previous year.

In 2017, Gujarat had seen 29.5% growth -- eight percentage points more than Karnataka.

Not in sync

The trend of new investments garnered by Karnataka is also not in sync with the national numbers, while that of Gujarat is more or less in line with the national numbers.

Nationally, the investment proposals, till August 2019, jumped by 7.1% to Rs 3.22 lakh crore, from Rs 3 lakh crore in the first eight months of 2018 -- when it had remained more or less flat. In the first eight months of 2017, the country had seen investments worth Rs 3.07 lakh crore, a jump of 7% year-on-year.

According to sources in the DIPP, the Central government has received complaints about Karnataka’s political leaders interfering in the day-to-day operations of the companies. Also, some firms are unhappy with the bureaucratic red tape existing in the state. “The state has seen a lot of political instability in the last couple of years. Also, there has been a delay in the allocation of land as well in certain cases. So, it is natural that more and more investors will move away from the state,” a senior official from the Union Commerce Ministry, not wishing to be named said.

Sources in the state industries department said that the state is seeing a satisfactory flow of investments.