Saturday, May 03, 2014

Study by top consultants KPMG finds Gujarat's investment climate dipping, talent pool below major states

By Our Representative
A top report prepared by well-known consultants, KPMG, employed in the past by the Gujarat government for advising on how to improve the state’s investment climate, has revealed that the state’s investment potential has been dipping over the last five years. In its just-released report, titled “District wise skill gap study for the State of Gujarat (2012-17, 2017-22)”, KPMG, which prides itself for having a network of global professionals offering best of advise on improving investment climate to governments and private parties, has shown, through a chart, that in Gujarat a total of Rs 103,871 crore of investment was made in 2012, which was the lowest since 2008.
Thus, in 2008, investment worth Rs 121,852 crore was made, which jumped to a whopping Rs 147,971 crore in 2009. However, thereafter, the investment began slipping – in 2010 it was Rs 141,021 crore, in 2011 it further slipped to 140,474 crore, and, finally, in 2012 it was Rs 103,871 crore. The report has been prepared for the National Skill Development Corporation, on request from the Gujarat government, in order to "assess" the gap Gujarat would face over the next several years in the demand and supply of manpower in view of the “huge” investment the state’s different sectors have been able to attract in the recent past.
While pointing out that "huge" investment across the state would mean the need for talented manpower, the report regrets, Gujarat has only a “marginally better penetration of higher education compared to the national average.” Thus, while Gujarat’s enrolment in higher education is 14.8 per 1000 population, as against the all-India average of 14 per 1000 population. It comments, “Other progressive knowledge economies like Andhra Pradesh, Tamil Nadu and Karnataka have higher penetration than Gujarat” – Andhra Pradesh 21.8 per cent, Tamil Nadu 20.8 per cent, Maharashtra 17.4 per cent, and Karnataka 16.4 per cent.
Higher education penetration per 1000 population
Not only has investment dipped, the report has found that number of large-scale units proposing to invest, too, has dipped. Thus, the number of big units proposing to invest in Gujarat was the highest in 2005, with 860, but these reached 383 in 2008. In 2009, as many as 382 big units proposed to invest in Gujarat. In 2010, these went up to 496. In 2011, these further increased to 541. However, in 2012, the numbers went down to the lowest ever since 2002 – 372. The top consultants give no explanation on say why this has happened, only saying, “Over the last five years, the state has witnessed over Rs 1 lakh crore of investments proposed per year.”
At the same time, KPMG also found a wide regional variation in investment, suggesting, efforts by the Gujarat government to uplift backward regions has not succeeded. It has said, “Analysis of regional distribution of investments in Gujarat indicates that the industrial development is concentrated around few districts of Kutch, Bharuch, Surat, Vadodara, Bhavnagar, Banaskantha, Rajkot, Jamnagar while other regions including the Dangs, Narmada, Dahod, Navsari remain backward in terms of industrial development.” In 2002-12, Kutch attracted an investment of Rs 5.24 lakh crore, while Ahmedabad received an investment of just Rs 15,801 crore.

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