Despite the increase in total projects investment in the last two years, Karnataka has not been able to regain its position in the top five investment destinations of India. Under the current regime of the Yediyurappa-led government it remains to be seen whether the state will be able to reinstate its investment distinction.
According to ProjectsToday, as on September 30, 2008, the outstanding total investment in Karnataka stood at Rs 20,1067 crore distributed over 2,026 projects. Its share in India's total investment stood at 5.34 per cent, giving it the seventh rank, lower than the sixth rank that it enjoyed in September 2007. In 2007, the outstanding investment stood at Rs 1,63,483 crore in 1,616 projects. In 2006, the outstanding investment stood at Rs 1,57,932 crore in 1,308 projects. In 2005 and in 2004, the outstanding investment stood at Rs 136,887 crore in 1063 projects and Rs 157,200 crore in 937 projects respectively. However, from 2004 to 2006, the state maintained its position in the top five league of projects investment (see table).
As of September 30, 2008, the states ahead of Karnataka in terms of outstanding total investment were Maharashtra, Andhra Pradesh, Gujarat, Orissa, West Bengal and Tamil Nadu, in serial order. The flow of fresh investment in Karnataka also declined last year Karnataka was destination to Rs.37,584 crore of new investments in the last one year, trailing behind West Bengal (Rs 95,551 crore), Chhattisgarh (Rs.78,321 crore), Jharkhand (Rs 76,374 crore) and Andhra Pradesh, to name a few.
However, Karnataka does enjoy the advantage of a high project implementation ratio. This implies that much of the investment announced in the state is under physical execution, which is a also a forerunner to timely completion of projects. As of September 30, 2008, the state enjoyed a project implementation ratio of 52.5 per cent, which was way above the national average of 41.2 per cent and better than most top-ranking states.
In Karnataka, the electricity sector registered maximum increase of 45.1 per cent in investment, during the year ending September 2008. Currently, the services and utilities sector accounts for nearly 40 per cent of the total investment followed by manufacturing with a share of around 28 per cent (see table).
State government and private sector entities dominated proceedings in Karnataka. The Indian private sector had outstanding investment of Rs 80,585 crore as of September 2008, accounting for 40.1 per cent of the total. State government entities followed closely with a share of 39.7 per cent share. Growth in private sector investment was a phenomenal 49 per cent during the 12-month period ending September 2008.
Cement, steel, automobiles, thermal power sectors attracted maximum investment during 2008. Although the IT industry has performed well over the year, the biotechnology sector did not see much forward movement.