Gujarat biggest investment destination in India

MUMBAI: Gujarat is still on top of the heap when to comes to the list of most attractive investment destinations in the country.

The state attracted maximum project investments in 2007-08, followed by Maharashtra, Orissa and Andhra Pradesh, according to a study by the Reserve Bank of India on projects funded by banks and financial institutions. At the same time, the overall investments in the country are expected to moderate in 2008-09.

With a proposed investment of Rs 62,442 crore from 100 projects, Gujarat continued to occupy the top spot as far as investment intention is concerned.

Of the total investment intentions in 2007-08, the state accounted for 22% of the total proposals for the year, though the share dipped from the previous year’s share of 25.8%.

Maharashtra, which ranked second, had a share of 12.7%, envisaging investments worth Rs 36,202 crore. Orissa was third with 10.9% share, accounting for investments worth Rs 30,913 crore, followed by Andhra Pradesh (8.5%), Chhattisgarh (6.2%), Tamil Nadu (5.6%), Karnataka (3.7%), Uttar Pradesh (3.5%) and the rest sharing less than 3% each.

Although there could be a slight shift in financing conditions which may affect the fundamentals that drive business investment, corporates’ incentives to invest are likely to remain strong in 2008-09. This would be because domestic demand and capacity utilisation rates would be high amidst improved profitability of the last few years.

The study also notes, “The real GDP grew at a substantially high rate in 2007-08, on top of robust economic growth in recent years. Notwithstanding the recent slowdown in overall business activity, corporate sector managed to maintain quite a decent profitability level in 2007-08 and against the backdrop of upbeat performance in recent years, the corporate sector appears to have the capacity to invest. Downside risks arise from the likely impact of high and rising international oil prices, increasing cost of external capital, hardening of interest rates abroad and input and wage cost pressures in some industries.”