NEW DELHI (TIP): Investment proposals by corporates are generally associated with improving business sentiment and often linked with the possibility of job creation. The comparison of proposed investment with actual implementation and job creation in the past 23 years, however, shows that the actual delivery has fallen well short of the promise.
Data from the department of industrial policy and promotion shows that between August 1991 and March 2014, the government received about 94,000 investment proposals. These proposals include Industrial Investment Intentions through Entrepreneurs Memorandum — IEMs (delicensed sector) and Direct Industrial Licences (licensable sector).
Put together, these proposed the investment of more than Rs 102 lakh crore and were supposed to create 2.3 crore jobs. The data on actual implementation of these proposals shows that only Rs 5.1 lakh crore was actually invested and just 20.1 lakh jobs created. That’s less than 5% of the proposed investments and 8.9% of the promised jobs.
A state-wise analysis of proposals shows that between August 1991 and March 2014 corporates proposed to invest Rs 15.4 lakh crore in Orissa —the highest in the country. It was followed by Gujarat and Chhattisgarh receiving over Rs 10 lakh crore of proposed investments and Maharashtra just a tad below that mark. Overall, there were 15 states, which were each supposed to get over Rs 1 lakh crore of investments in these 23 years.
When one analyses actual investments, Haryana has been the most successful among these 15 states in converting proposals to reality as 18.9% of the proposed money actually reached the state. It is followed by Gujarat (12.6%) and Uttar Pradesh (11.4%). The states that fared the worst in this conversion are Bihar, Jharkhand, Chhattisgarh and Orissa, where less than 1% of the proposed money actually arrived.
So, what is the investment to job creation ratio? Overall, the Rs 5 lakh crore actually invested created a little over 20 lakh jobs, which amounts to four jobs per crore of investment. There were 25 states which witnessed the actual investment of more Rs 1,000 crore. Among these states, Jammu and Kashmir witnessed the most labour intensive investments, while Gujarat had the most capital intensive ones. Every crore of rupee invested in Jammu and Kashmir created about 12 jobs, while in Gujarat a crore of investment yielded only two jobs.
In the investment to job creation ratio, Jammu and Kashmir is followed by Goa, Uttarakhand, Kerala and Punjab, where ten or more jobs were created per crore of investment. The worst state/UTs in this list are Madhya Pradesh, Jharkhand, Daman & Diu, Uttar Pradesh and Gujarat.