Gujarat sees highest share of private investment in 2016-17: RBI

Near-term outlook for new investment in economy to be positive

Gujarat accounted for the highest share in total cost of private corporate investment for financial year 2016-17, according to a study by the Reserve Bank of India (RBI).

Gujarat made up 22.7 per cent of the aggregate investment, followed by Maharashtra at 8.6 per cent, the study, part of the RBI’s monthly bulletin for September, said. Andhra Pradesh, which held the highest share at 12.3 per cent in FY16, saw its share drop to 8.2 per cent.

Data for the past five years showed 62 per cent of the projects were predominantly taken up in Gujarat, Odisha, Maharashtra, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Karnataka. The share of “multi state” projects halved in the recent period, probably reflecting the bottlenecks in obtaining clearances from multiple state authorities.

“The near-term outlook for new investment in the Indian economy appears to be improving, as reflected in continued intentions to commission projects in power and construction sectors, in the first half of 2017-18. FDI (foreign direct investment) and private placement of debt has gained momentum and should boost financing of capex in the year,” the central bank said.

The total cost of projects almost doubled to ~1,82,800 crore in FY17, from ~91,800 crore in FY16. The RBI estimates planned capital expenditure to amount to ~69,400 crore, in FY18, a slight improvement over the past year. An additional ~85,400 crore worth of capex would have to come from new investment intentions to match the level estimated for FY17.

The central bank expects the investment climate to improve in the subsequent quarters, in view of business sentiment regarding the goods and services tax (GST) and FDI, despite the seasonal drop in the first quarter of new project announcements.

Power sector projects occupied a big share in all the major states with the exception of Maharashtra and Tamil Nadu where the construction industry made up a majority of projects. Textiles and transport equipment and parts industries in Gujarat, cement and roads and bridges in Karnataka and pharmaceutical and drugs in Telangana also formed a major share of the projects financed by banks or financial institutions.