Karnataka, which was in the forefront among other states in attracting investments when the country witnessed IT revolution 10 years ago, could not perform well on the industrial front for the past 4-5 years. Frequent political changes is cited to be the primary reason for this. However, the state has now re-emerged as a major industrial destination, with investments pouring in ahead of the much-hyped Global Investors Meet (GIM) scheduled for the first week of June. In the past four months the government has approved investments worth Rs 3-lakh crore covering 132 projects. However, the government has been approving mega projects on the back of GIM, when the state is reeling under acute power shortage.
On Monday, the BJP-led state government cleared industrial projects worth Rs 58,517 crore in its state high-level meeting (SHLC). The projects which were granted an in-principle approval include 14 power projects and expansion projects by IT behemoths Infosys and Wipro. Previously as reported by FE, the state government provided green signal to the Rs 2,500 crore cement plant project promoted by the Anil Ambani-owned Reliance Cementation Pvt Ltd as well.
The state has already given a nod for the global steel majors Arcelor Mittal and Posco to set up their mega steel plants while also clearing the cement plant project of Lafarge, the world?s top cement manufacturer. The MoUs for all these projects would be singed during GIM. It is expected that the government would sign around 300 MoUs covering Rs 5-lakh crore investments during GIM..
Industrial investments in the state had declined to Rs 1.10 lakh crore in 2008-09 from Rs 1.70 lakh crore in 2007-08. But immediately after the BS Yeddyurappa-led government took charge in the state in 2008, it declared that it would make the state a major industrial destination with the help of GIM. As promised, the government has sanctioned projects worth Rs 1.90 lakh crore in 2009-10, the highest ever in the history of Karnataka
But ironically, these investments have come in amidst acute power shortage in the state. The state is reeling under severe power shortage with the demand-supply gap widening to 22%. The daily energy consumption is around 150 mw with an annual load growth of 8-10%. The peak demand is about 7,877 mw but the availability is only 6,100 mw. Two units of Raichur Thermal Power Station, the major power generating source for the state, may collapse any time as they are not fit to operate.
KR Girish, president of Bangalore Chamber of Industry and Commerce, and senior partner, KPMG says, ?Karnataka’s power shortage problems have stemmed from the failure of successive governments to ramp up capacity.?
The investors are lining up to invest in Karnataka despite the power issues, due to the rich natural resources, a peaceful industrial climate, skilled manpower and government backing. The companies are also positive that the government will be able to tide over the power crisis in years to come.
According to VP Baligar, principal secretary for commerce and industries, the government has taken initiative to add 12,000-13,000 mw to the grid in the next three years. The energy department is tapping every power source such as hydel, thermal, gas, wind and solar. It is expected that some of the new industrial proposals would take up to 10 years to be implemented. The gestation period of new projects would give the government adequate time to ensure power supply for the projects, he said.