Projects Investment in Maharashtra

By Mallika Jain

Large number of projects Maharashtra attracted in the wake of economic liberalization in the 1990s helped the state in taking an early lead over other major states. Good infrastructure and adequate power available at that period also helped the state in attracting private promoters in large numbers.

Though the state continues to be the numero uno in terms of total investment, the title it has managed to retain only because of the heavy investment proposals put forth by the public sector agencies.

The late 1990s and early 2000 saw private investors shunning the sate and opting for neighbouring states like Gujarat, Karnataka, Andhra Pradesh and Tamil Nadu. As a result the quantum of private investment decelerated. However, the situation changed for better since 2007. The share of private investment in the total investment after hitting a low of 28.1 per cent in 2005, started climbing up since then. In 2009, the investment intention of private sector was 37.3 per cent. Still compared to states like Gujarat, Andhra Pradesh and Karnataka the share of private investment in the total investment is still far lower.

Lack of adequate supply of power, creaking infrastructure and non-availability of land are some of the main issues dissuading private promoters from locating their projects in the state. According to the latest data available from CEA, as of February 2009, the state had generation capacity of 20,289.5 MW and was facing a peak demand deficit of 26.3 per cent. In the first two years of the 11^th Plan around 2000 MW of new generation capacity was added in the state.

 As of March 2009, the state had 5,981 projects worth Rs.4,83,348 crore. A little more than half (54%) of the total investment was accounted by Services and Infrastructure projects. Share of the Manufacturing sector rose from 9.5 per cent in March 2005 to 12.3 per cent in March 2008. It declined a bit to 11.2 per cent in March 2009.

Sudden spurt in announcement of new power projects by both public and private promoters in the last two years saw the envisaged investment in the Electricity sector jump up by 48 per cent and 46 per cent respectively in March 2008 and March 2009. Of the total investment planned in the power sector nearly half is owned by private promoters.

A Rs.4,200 crore Alumina complex at Ratnagiri by Ashapura Minechem (supported by a 330 MW power plant); a Rs.4,000 crore Truck project of Mahindra & Mahindra at Chakan, Pune; a Rs.3,575 crore passenger car project of Tata Motors at Ranjangaon, Pune and a Rs.2,450 crore passenger car project of Volkswagen India at Chakan, Pune are some of the mega projects coming up in the Manufacturing sector.

Among the subsectors, Sugar (55 projects worth Rs 5,029 crore), Refinery (12 projects Rs.4357 crore), Steel (62 projects worth Rs 5,204 crore) and Automobiles (9 projects worth Rs 14,685 crore) attracted bulk of the investment.

The Electricity sector which recorded a 55 per cent growth in the outstanding projects investment between March 2008 and March 2009 saw a number of mega projects being announced by private promoters.

Of the 37 new power projects announced in the state, 15 were by public sector units and 22 were by private developers. In terms of investment around 60 per cent was owned by the government sector and the balance 40 per cent by the private sector.

Some of the large size power projects coming up in the state are:

Even if a couple of the above projects fructify during the 11^th Plan, the state’s power deficit will recede to a large extent. Of the 215 power projects the state currently has 61 were under execution.

Around 57 per cent of the total investment planned in this critical sector is by the state government. Of the 4,815 projects entailing a total investment Rs 2,61,545 crore, the state owns 2,280 projects worth Rs.1,50,264 crore. State investment is active in Roadways, Water supply schemes, Metro Railway system and Community services sectors. Central government investment is concentrated in Railways, Ports, etc. and the

Private sector investment is concentrated in Tourism, Airports, Ports, etc.

Outlook

The huge amount of outstanding projects investment currently Maharashtra enjoys might help it in retaining the title of the leading state in terms of total investment for a few more years. However, if the state government fails to address the power shortage and inadequate infrastructure issues at the earliest, private sector which has started showing some interest in locating their projects in the state might start looking at other states where investment environment is friendlier.

 Published in Project Vendor - May 2009