Ila Patnaik reviews CMIE data on state wise per capita investment in 2007. The states with the leading investment per capital are Haryana and Orissa. It just happens that I am quite familiar with both states since I am Oriya and go back there to visit my folks quite often and because I grew up in Haryana and go back there once in a while as well.
Both states have able forward thinking administrations. And some help of course. Haryana’s proximity to Delhi is something they have taken advantage of. Orissa is blessed with more than its fair share of natural resources. But beyond that there is still a lot of good work going on. In Bhubaneswar, the traffic isn’t anywhere near being a problem yet. But the government is working hard to widen roads. Shows that someone is thinking ahead.
Patnaik attributes the differences and the trends in investment per capita to the quality of the state government administration. If I were to drill down a little more and ask myself the question, what would I look at if I were to set up a new center for my business my criteria would be as follows:
Rule of the law – This is not just about riots and bandhs. It is also about how secure my employees feel to live and work in the state. Do government officials harrass or help businesses? And so on. The two states at the bottom of the table are Uttar Pradesh and Bihar.
Resources – In our case that would be about skilled human resources. For a steel company it might be iron ore or coal. Orissa and Jharkhand have plenty of the latter.
Infrastructure – I don’t need to explain this one. But I believe there is a nuance here which should not escape us. Maharashtra, Tamil Nadu, Andhra Pradesh and Karnataka are either below the national average or have dropped their ranks. This is somewhat unexpected. My explanation for this is – urban infrastructure. All four states have mega cities that are the main centers of investment. However, while real estate prices in these cities climb into the stratosphere, traffic, pollution, water and electricity shortages are making them less attractive. Haryana is an exception here in that Gurgaon and Faridabad, to a lesser extent aren’t yet repelling investment.
The data itself is quite interesting. Being in the financial information business, I automatically start looking behind the numbers. How is this collected? What are its sources? Inclusions, exclusions? Is it investments announced or investments deployed? Regardless, if the data is comparable across states it is valuable.
Hopefully the states are looking at the data too, not just economists.
[via Ajay Shah]