Skewed Trends In Investments: Uttar Pradesh, Gujarat Ahead; Kerala, Assam Behind.

Kerala, Goa, Assam, Haryana, and West Bengal lag behind Uttar Pradesh, Gujarat, Odisha, Maharashtra, and Karnataka in terms of utilizing industrialization plans.

The Reserve Bank of India”s study on the trends in industrialization in India shows a skewed picture. In 2022-23, five states received more than half of the total bank-assisted investment proposals. The same year also recorded the highest capital outlay since 2014-15, with a total investment plan of Rs 352,624 crores, up 79.50% from the previous year, despite rising interest rates.

In 2021-22, there were 401 projects with a total cost of Rs 1,41,976 crores. In 2022-23, the number of projects increased to 547, with a total cost of Rs 2,66,547 crores, an increase of 87.7%. The RBI said that the “envisaged total cost of the projects financed by banks and financial institutions reached a new peak during 2022-23 since 2014-15.”

Of the total investment, Uttar Pradesh received the highest share of 16.2%, or Rs 43,180 crores. Gujarat was second with 14%, or Rs 37,317 crores. Odisha came in third with 11.8%, Maharashtra fourth with 7.9%, and Karnataka fifth with 7.3%.

Kerala and Goa had the lowest investment shares, with 0.9% and 0.7% respectively. Assam and Haryana each received 0.8%, while West Bengal received 1%.

The RBI attributed the increase in investment to the government”s capital expenditure plans. RBI Governor Shaktikanta Das said that “investment activity gained further steam on the back of government capital expenditure, rising business optimism and revival in private capex in certain key sectors.”

The RBI study also found that a sustained pick-up in bank credit, rising capacity utilization, improved business outlook and demand conditions, and various government policy initiatives to support investment activities provided a conducive environment for private corporates to undertake fresh capital investment.

The study also found that greenfield projects accounted for the largest share of 93.1% in the total cost of projects undertaken by banks and financial institutions in 2022-23. The infrastructure sector accounted for 60% of the total projects, which includes power, telecom, ports and airports, storage and water management, special economic zones (SEZs), industrial, biotech and IT parks, and roads and bridges. Within this, roads and bridges had a significant share, supported by the central government”s push through the Bharatmala initiative.