The growth in new investments attracted by Chhattisgarh have declined sharply from about 59 per cent growth rate in 2006-07 to just about seven per cent in 2014-15, according to a just-concluded study titled ‘Impact of Delay in Investment Implementation in Chhattisgarh,’ by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) released here on Thursday.
“Very little progress has been made in terms of garnering a bigger role in the national scheme of things by Chhattisgarh as the policy makers have not been able to exploit State’s true potential as its contribution to Indian economy has remained at just 1.6 per cent in 2013-14 as was observed in 2004-05 as well, it stated.
So far as industrial sector is concerned, its growth has also slowed significantly from 10 per cent as of 2011-12 to just about five per cent as of 2014-15, it stated.
Chhattisgarh’s gross state domestic product (GSDP) stood at `1 lakh crore as of 2014-15 with industrial sector accounting for about 42 per cent share followed by services sector (39.5 per cent) and agriculture and allied activities (14 per cent), the report stated.
Poor execution of investment projects worth `2.39 lakh crore in Chhattisgarh has pushed up their cost by nearly `1 lakh crore i.e. over 41 per cent of their actual cost, the report stated. 151 Projects with investments worth almost `3 lakh crore have remained a non-starter i.e. about 55 per cent of the total outstanding investments worth `5.6 lakh crore attracted by Chhattisgarh from various domestic and foreign sources both in public and private sectors as of financial year 2014-15, it stated.
Out of these 151 projects that remained stuck under different stages of implementation across Chhattisgarh as of FY 2014-15, 73 projects reported either time or cost overruns or both, the report stated.
Amid stuck projects in Chhattisgarh as of FY 2014-15, power sector had maximum share of 52 per cent followed by manufacturing (38 per cent), mining (six per cent), non-financial services (3.5 per cent), construction and real estate (0.2 per cent) and irrigation (0.2 per cent).
“Delay in land acquisition, lack of clearances (both environment and non-environment), fund constraints, poor promoter interest, unfavourable market conditions, dearth of skilled labour, poor supply of fuel/feedstock/raw material, law and order problems are certain key factors that have resulted in serious cost overruns,” said ASSOCHAM National Secretary General DS Rawat while releasing the findings of the study at a press conference in Raipur .
“Considering that investment is the key driver of productivity and sustainability that leads to development and growth, the Chhattisgarh government must try to identify the key impediments that are blocking investments and address them with vigour and urgency,” he said.
The ASSOCHAM study pointed out that several departments of the State government play a crucial role in implementation of investment projects as decisions regarding land acquisition, shifting of utilities and others are taken at the State government’s level, besides geographical features of the state may also affect the projects.
Sector-wise, cost of projects in services sector have surged maximum by 55 per cent followed by manufacturing (54 per cent), mining (53 per cent), electricity generation (33 per cent) and irrigation (three per cent).
Ownership-wise, private sector owned investment projects constituted 67 per cent of projects that have registered cost escalation followed by Central government owned investment projects (32 per cent) and State government owned projects (one per cent).
Besides, Central government projects have reported highest cost overrun to the tune of 47 per cent followed by private sector (37 per cent) and State government (10.5 per cent).
As of FY 2014-15, Chhattisgarh had attracted total outstanding investments worth Rs 5.6 lakh crore, highlighted the study prepared by The ASSOCHAM Economic Research Bureau (AERB).
Power sector accounted for lion’s share of about 47 per cent in the total outstanding investments attracted by the State followed by manufacturing (37 per cent), mining (8.5 per cent), non-financial services (seven per cent), construction and real estate (0.4 per cent) and irrigation (0.1 per cent).
Surguja-Mahasamund are the most sought-after regions by investors as it attracted over 57 per cent of total outstanding investments attracted by Chhattisgarh followed by Bilaspur-Raipur (20 per cent), Dhamtari-Dantewada (16 per cent) and multi-regions of the State (seven per cent).
Chhattisgarh also paints a grim picture vis-à-vis agriculture sector performance as agriculture growth in the State had declined from 26 per cent in 2010-11 to less than two per cent in 2014-15.
However, with 75 per cent of workforce in Chhattisgarh being dependent upon agriculture and about 77 per cent of people living in rural areas, the State needs to look into improving the spread and quality of irrigation, land development, extend of rural electrification and building rural roads to promote agriculture and allied activities sector.
Besides, with Chhattisgarh clocking third highest compounded annual growth rate (CAGR) of over 28 per cent in milk production (11 lakh tonnes in 2012-13), dairying could emerge as an important source of income and employment for the rural poor by providing opportunities for value chain development, suggested the ASSOCHAM study.
Thrust on dairy industry development by the State government can help increase milk production in Chhattisgarh to about 16 lakh tonnes by 2017-18 thereby clocking a CAGR of over six per cent.
ASSOCHAM has as such suggested the state government to aim at facilitating large entrepreneurs that can eventually turn into separate business hubs to provide incubator services for setting up numerous ancillaries and downstream processing small and medium enterprises (SMEs).
Chhattisgarh holds tremendous potential in the tourism sector to generate more revenue and create employment opportunities, highlighted the ASSOCHAM study.
The State government should make inclusive tourism policies and programmes, provide adequate, convenient, fast and safe facilities as Chhattisgarh had clocked highest annual growth rate of about 52 per cent in domestic tourist arrival across states during 2012-13 which shows an underlying potential awaiting to be tapped, it stated.
A high-level committee should be formed by the Chhattisgarh government headed by the Chief Minister which should also have industry members inviting those industrialists who are serious about investing in the State, Rawat said.