Karnataka may be the leading state in
the IT and biotechnology sector but
it ranks a poor fifth in project investment
behind Maharashtra, Andhra
Pradesh, Orissa and Gujarat. The investment
is clearly not commensurate with
the geographical size of this southern
state on the west coast of India.
As of September 2011, Maharashtra
boasted 8,082 projects valued at
709,659
crore, a share of 11.4 per cent of the total
project investment in India. In contrast,
Karnataka had only 3,524 projects worth
415,350 crore, a minuscule share of 6.7
per cent (see table).
TRENDS IN PROJECT INVESTMENT: BY SECTORS (` CRORE) |
| Year-end |
Manufacturing |
Mining |
Power |
Infrastructure |
Irrigation |
Total |
| September 2007 |
38,861 |
1,317 |
26,135 |
77,091 |
20,079 |
163,483 |
| September 2008 |
55,719 |
1,685 |
37,931 |
78,143 |
27,589 |
201,067 |
| September 2009 |
70,201 |
1,926 |
70,439 |
101,582 |
27,596 |
271,743 |
| September 2010 |
94,562 |
3,830 |
108,323 |
122,460 |
26,472 |
355,647 |
| September 2011 |
144,367 |
3,030 |
96,333 |
144,631 |
26,989 |
415,350 |
| CAGR |
30.0% |
18.1% |
29.8% |
13.4% |
6.1% |
20.5% |
| Source: www.projectstoday.com |
In recent months, governance in Karnataka
has been marred by political scandal
over illegal mining activities that saw
B.S. Yeddyurappa sacked as chief minister,
and later arrested, for his involvement.
As a result, infrastructure development
took a backseat.
The state government, now led by a
new chief minister, is putting its house
in order: it has decided to fast-track the
implementation of nearly a 100 infrastructure
projects through public-private
partnership.
In a bid to fill the gaps in various infrastructure
sectors like urban transport,
railway, ports, airports, energy, agriinfrastructure
and industrial infrastructure,
the government has identified 91
major projects with a total investment
outlay of
67,792 crore through PPP
mode. It will execute these projects
through sustainable means, both environmentally
and economically, and in an
inclusive and equitable manner.
For these projects, the Karnataka government
has identified over 100,000
acres of land under its land bank scheme
for industries and notifications have been
issued for about 83,000 acres. The government
has signed MoUs with nearly
400 companies with a total envisaged
investment of close to
90 billion. More
than half of these projects are currently
under implementation.
TOP TEN PROJECTS IN KARNATAKA |
| Promoter |
Project |
Amount (`Crore) |
District |
| Posco India Pvt. Ltd |
Finished Steel (Gadag) |
32,336 |
Gadag |
| Coastal Karnataka Power |
Tadadi Ultra Mega Power |
20,000 |
Uttara Kannada |
| Nandi Infrastructure Corridor Enterprises Ltd |
Bangalore-Mysore Corridor Road |
18,000 |
Bangalore,Mysore |
| NTPC |
Coal Based Power (Kudigi) |
15,000 |
Bijapur |
| Arcelor-Mittal India |
Integrated Steel |
15,000 |
Bellary |
| Mangalore Refinery & Petrochemicals Ltd |
Mangalore Refinery - Expansion |
12,412 |
Dakshina Kannada |
| Aaress Iron & Steel |
Alloy Steel (Hospet) |
11,900 |
Bellary |
| JSW Steel |
Steel (Toranagallu) - Expansion |
10,000 |
Bellary |
| NMDC |
Integrated Steel |
9,000 |
Bellary |
| KIOCL |
Integrated Steel |
9,000 |
Bellary |
| Source: www.projectstoday.com |
As H.V. Harish, Vice President, Bangalore
Chamber of Industry and Commerce,
said in a recent presentation on
'Indo-US Bilateral Trade - Opportunities
& Prospects', said that private sector
had a huge opportunity for investment
which was as much as 30 per cent
of the capital investment.
Harish pointed to the existence of 87 Fortune
500 companies and more than 700
multinational companies operating in the
state. The services sector, particularly
information technology and biotechnology,
dominate industry in Karnataka.
Out of the main sectors, transport and
logistics is leading with maximum investment
for projects like monorail, metro
rail, airport and seaport development,
state and national highways including
outer ring road projects, and bus terminals.
The power sector, too, is booming
with the hydropower leading in the
renewable energy segment.
Power
Energy consumption in Karnataka
increased from 36,118 million units in
2009-10 to 39,774 million units in
2010?11. The state government plans to
increase the annual per capita availability
of electricity from 680 units to 1,000
units within the next three years. The
total outlay of the energy sector has been
increased from
6,245 crore in 2010-11 to
8,523 crore in 2011-12.
TRENDS IN PROJECT INVESTMENT: BY OWNERSHIP (` CRORE) |
|
|
|
|
Share (%) |
| Year-end |
Government |
Private |
Total |
Private |
Government |
| September 2007 |
107,745 |
55,738 |
163,483 |
34.1 |
65.9 |
| September 2008 |
118,264 |
82,802 |
201,067 |
41.2 |
58.8 |
| September 2009 |
170,988 |
100,755 |
271,743 |
37.1 |
62.9 |
| September 2010 |
233,770 |
121,877 |
355,647 |
34.3 |
34.3 |
| September 2011 |
241,525 |
173,825 |
415,350 |
41.9 |
58.1 |
| Source: www.projectstoday.com |
The first 600-mw unit of Udupi Power
Corporation Ltd became operational in
2010. Work orders have also been issued
for power projects at Yeramus, Edlapura
and Bellary with a cumulative installed
capacity of 3,150 mw. The state has
requested the central government to provide
coal linkages for these plants.
Roads
In the road sector, the state government
has a major challenge of developing and
maintaining a road network of adequate
capacity and quality. During the past five
years, Karnataka saw the completion of
28,059 km of road renewal and 8,900 km
of road upgradation and widening, while
development of 4,000 km of roads is currently
in progress.
The state has also obtained a loan
approval from Asian Development Bank
for developing state highways up to 600 km at an estimated cost of
1,330 crore
under nine packages.
Airports
Karnataka is developing five minor airport
projects on PPP basis at Hasan,
Shimoga, Gulbarga, Bellary and
Bijapur. The projects, which are being
developed by the state infrastructure
development department, are estimated
to cost
1,300 crore.
The swanky Bengaluru International
Airport at Devanahalli
was opened in May
2008. The airport was
developed by Bengaluru
International Airport
Ltd with private promoters
holding 74 per
cent stake and the state
government holding the
balance 26 per cent.
Phase-I of the airport
was built with an investment
of
2,470 crore.
KARNATAKA VS. OTHER TOP STATES (AS OF SEPTEMBER 2011) |
| States |
Projects |
` Crore |
Share in Total (%) |
Imp. Ratio (%) |
Rank |
| Maharashtra |
8,082 |
709,659 |
11.4 |
50.9 |
1 |
| Andhra Pradesh |
3,580 |
648,834 |
10.4 |
55.2 |
2 |
| Orissa |
1,747 |
561,382 |
9.0 |
44.2 |
3 |
| Gujarat |
2,505 |
520,029 |
8.3 |
47.3 |
4 |
| Karnataka |
3,524 |
415,350 |
6.7 |
40.0 |
5 |
| All India |
43,097 |
6,242,341 |
100.0 |
47.3 |
|
| Source: www.projectstoday.com |
Currently, BIAL is
expanding Terminal-1.
The project work is underway
with construction
partner Larsen & Toubro
Ltd. This development
comes after the airport
completed three years of
operations and achieved a
growth rate of 18 per cent
per annum, the highest in
the country.
Railways
The state government is contributing 50
per cent of the cost of 16 railway projects
envisaging both new lines and gauge
conversion. During the past three years,
the state has provided its share of
487
crore for three completed projects,
namely Sholapur-Gadag, Kottur-Harihara
and Shimoga-Talaguppa.
For the current year, an outlay of
478
crore has been provided to meet the
Karnataka government's share, mainly
for ongoing rail works as well as newly
sanctioned works. The DPR for a monorail
is also in progress.
Industry
In the industrial segment, about 20
special economic zones out of the 52
SEZ sanctioned for the state are currently
operational. These special economic
zones recorded exports of
18,560 crore in 2010-11 against
exports of
10,177 crore in 2009-10,
registering a growth of 82.37 per cent.
There are a total of 78 units operating
in the 20 operational SEZ with total
investment of
13,805 crore.
Urban Infrastructure
In the urban infrastructure sector, four
major projects with a total investment of
7,500 crore are being financed by external
funding agencies and are currently in
implementation stage. The Bangalore
Water Supply and Sewerage Board has
been implementing the Cauvery Water
Supply Scheme Stage-IV Phase-II at a
total project cost of
3,384 crore.
The Asian Development Bank has
approved financing of a sustainable
coastal protection and management project
at a total cost of
941 crore. During the
current year, it is proposed to commence
phase-I involving anti-sea erosion works
at Ullal in Dakshina Kannada district at a
cost of
350 crore. Such a huge project has
not been taken up in the state before.
Infrastructure Fund
In the beginning of the current year, the
Karnataka government set up a fund for
providing financial assistance to state
agencies taking up infrastructure projects
under PPP mode. The new fund,
called Karnataka Infrastructure Project
Development Fund, was created under
the department of infrastructure. Infrastructure
projects from concept to
appointment of concessionaire usually
take 12 to 14 months and these projects
require funds throughout the implementation
stage.
KIPDF will provide financial support for
such project development activities and
assist projects that closely support the
best practices in PPP project identification
and preparation. The fund primarily
focuses on investment in railways, airports,
ports, roads, urban infrastructure,
energy, tourism and industrial infrastructure.
The investment potential for all
these areas is estimated at
92,460 crore.
As per the report of Infrastructure
Development Department of Karnataka,
about 75 PPP projects are in pipeline and
are in various stages of implementation
(see table).
FACTFILE |
| Capital |
Bengaluru |
| Area |
191,791 sq. km |
| Population (Census 2001) |
52,850,562 |
Population density
(per sq. km) |
276 |
| Per capita income |
`40,309 |
| Percentage of urban
population |
35% |
| Literacy rate |
66.6% |
| Number of districts |
30 |
| Number of towns |
270 |
| Number of villages |
27,028 |
| Prominent cities |
Ankola, Bengaluru, Bagalkot,
Belgaum, Bidar, Bijapur,
Chikmagalur, Chitradurga,
Dandeli, Hubli-Dharwad,
Davangere, Gadad-Betageri,
Gulbarga, Harihar, Kolar,
Mandya, Mangalore, Mysore,
Raichur, Shimoga, Tumkur
and Udupi |
| Prominent airports: |
Bengaluru and Mangalore |
| Prominent ports: |
New Mangalore and Karwar |