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Private sector shuns Bimaru states
By Shashikant Hegde
The four 'Bimaru' states-Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh-account for around 36 per cent of the total population and 31 per cent of the total area of India. The states are also very rich in natural resources. However, continuous dismal economic performances and the indifference of the state government agencies have made investors wary of committing projects investment in these states. As a result, the states have managed to attract investments far beneath their actual potential.
According to ProjectsToday, as of March 31, 2002, the four states had an outstanding projects investment of Rs 1,87,554 crore, accounting for around 11 per cent of the total investment planned in the country. The leading state, Maharashtra, alone has managed to attract more investment (Rs 1,92,000 crore) than all these four states put together.
A yearly overview of projects investment in the four states reveals that projects investment increased by 11 per cent during 2001-02. This is 2 percentage points higher than the 9 per cent increase in investments at the all-India level. However, bulk of the investment is proposed by the Central and state agencies. Rajasthan is the only state fancied by the private promoters, where around 61 per cent of the total investment is by the private sector.
The unwillingness of the private sector to commit investment in Bihar is crystal clear as only 1 per cent of the total investment is owned by the private sector. Central government sponsored projects in the railways, roadways and power sector account for nearly 80 per cent of the total investment. State government investment is largely concentrated in irrigation projects. The slow fructification of projects investment in the state is indicated by the lowest projects implementation ratio of 27 per cent.
Madhya Pradesh seems to be better managed among the Bimaru states. Projects investment in the state increased by 10 per cent from Rs 45,018 crore in March 2001 to Rs 49,586 crore in March 2002. An interesting feature of the projects investment in MP is that the three major ownership groups, Central government, state government and private sector, account for nearly one-third each of the total investment planned in the state.
The efficiency of the state machinery is also reflected in the faster projects implementation. As of March 31, 2002, nearly three-fourth of the total envisaged investments were under various stages of implementation. No other major states in India enjoy such a high implementation ratio.
Rajasthan is the only Bimaru state, where the outstanding projects investment fell by 3.3 per cent in the fiscal 2001-02. It declined from Rs 33,285 crore in March 2001 to Rs 32,173 crore by March 2002. Lack of fresh investment proposals and a sharp 15 per cent decline in the power sector led the overall decline in the outstanding investment. During 2001-02, the Rs 2,058 crore Suratgarh thermal power project was commissioned in the state.
Among the Bimaru states, Rajasthan is the most preferred state by private promoters. About 61 per cent of the total investment planned in the state is by the private sector. This also includes projects proposals announced by foreign companies in the power and hotel sectors.
Uttar Pradesh has managed to attract only 4.7 per cent of the total investment in the country. Nearly 75 per cent of the total investment is being planned by the state and Central government agencies with private sector accounting for the balance 25 per cent.
According to a recent report, the Planning Commission expects the Bimaru states to report sterling performances during the 10th Plan period. But, without quick implementation of infrastructure and power projects and without sufficient private participation, expecting sterling performances from these states would be a tall order.
(1/5/02)
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