State stares at failure to get steady inflow of funds

State stares at failure to get steady inflow of funds
Despite the brouhaha surrounding the investment intentions received by Karnataka in the recent past, the state seems to be staring at a miserable failure in converting them into actual investments.

The state has had low realisation (7.40%) of industrial investment intentions in the last three years, despite receiving a huge bulk of investments, reveals data available with the Department of Industrial Policy and Promotion (DIPP).

While the state has received intentions worth Rs 3,28,722 crore since January 2015 (32% of Industrial Entrepreneur Memorandum Intentions received nationally), only Rs 24,321 crore of it has been realised.

This year alone, till July-end, the state amounted for 50.24% intentions received nationally, in value terms, 2.5 times more than second-placed Gujarat. However, only Rs 1,379 crore has been realised during the same period.

On the contrary, Maharashtra, which has the highest realisation of investment intentions of 73.46%, has realised investments worth Rs 67,570 crore out of the Rs 91,978 crore intentions received.

Poll-bound Gujarat has realised Rs 4,627 crore till July. The state is second in terms of intentions, pegged at Rs 50,716 crore during the period.
Interestingly, Madhya Pradesh, which has seen investment intentions worth Rs 32,651 crore flowing in since 2015, has the highest realisation rate of 87.79%. The state has seen investment inflows worth Rs 28,665 crore during this period.
Most of the Northeastern states have faced constant neglect from investors in the past three years, except for Assam, Meghalaya and Sikkim. All the other states in the region, apart from the Union Territory of Lakshadweep, have not seen any investment intentions in the said period.
According to data available with the Karnataka Udyog Mitra (KUM) - which has been aggressive in wooing FDI into the state - the government has approved some key investments between 2013-14 and 2015-16.

The investments include Biocon (Rs 1,060 crore), Manipal Health Enterprises (Rs 1,121 crore), GlaxoSmithKline Pharmaceuticals (Rs 994 crore), Tata Power (Rs 1,025 crore), PepsiCo India (Rs 590 crore), Ruchi Soya Industries (Rs 455 crore), Mangalore Refinery and Petrochemicals (Rs 378 crore), and JSW Paints (Rs 600 crore), among others.

As per the DIPP data, FDI equity inflows in the state was pegged at Rs 14,300 crore for FY2016-17, down 46.62%, from Rs 26,791 crore in 2015-16. Industries Minister R V Deshpande did not respond to calls from DH.

When contacted, a senior official in the industries department blamed the low realisation rate on the gestation period.

"It takes at least two to three years for investments to materialise," the official said. IT and BT Minister Priyank Kharge raised an alarm over the "disparity of the numbers" rolled out by the DIPP.

“One the one hand, they say that Karnataka has seen the highest FDI inflows, while on the other, they say that we are 13th in the ease of doing business. It is kind of weird,” he told DH.

Govinda Rao, member of the Fourteenth Finance Commission, said: "In general, the investments in the country are at a low right now. In this particular case, it goes on to show how lack of infrastructure and delays in approving proposals is costing the state."
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