Karnataka is one among the few States which are prime destinations for corporate investments. Karnataka secured 5th place among Indian States in attracting multi-State projects financed by select banks and financial institutions (FIs) during 2022-23.
Karnataka received 7.3% of the total projects, worth close to ₹19,500 crore, funded by major private sector and foreign banks, and financial institutions such as Industrial Financial Corporation of India (IFCI), Life Insurance Corporation (LIC), Power Finance Corporation (PFC), Rural Electrification Corporation of India (REC) and Export-Import Bank of India (EXIM), according to Reserve Bank of India’s August 2023 bulletin.
Areas of investment
Investments are largely in power, telecom, ports and airports, storage and water management, special economic zone, industrial, biotech and IT park, and roads & bridges. These investments have not covered projects funded by the Central or State governments, and trusts or educational institutions.
Top 5 States in project funding
- Uttar Pradesh (16.2%)
- Gujarat (14%)
- Odisha (11.8%)
- Maharashtra (7.9%)
- Karnataka (7.3%)
Top five states — Uttar Pradesh (16.2%), Gujarat (14%), Odisha (11.8%), Maharashtra (7.9%) and Karnataka (7.3%) — together accounted for 57.2% share in total project cost during 2022-23, which is higher than the 43.2% share during 2021-22.
About 547 projects got assistance from banks and FIs during 2022-23 with a record high total project cost of ₹2,66,547 crore, compared to 401 projects having a total project cost of ₹1,41,976 crore during 2021-22.
Karnataka’s share in the country’s projects was 8.5% between 2013-14 and 2020-21, and 6.9% in 2021-22. These are projects with cost exceeding ₹10 crore, and majority ownership stake is with private corporate firms.
Purpose-wise pattern of projects indicates that investment in green field (new) projects accounted for the largest share of 93.1% in the total cost of projects financed by banks and FIs during 2022-23, in line with the trend seen in the past. A marginal share of 6.1% of total project cost was directed towards expansion and modernisation, according to the RBI.
Multi-State projects
Karnataka is one of the top recipients of multi-State projects that are spread over more than one State largely owing to a range of factors, including the accessibility to raw materials, the availability of skilled labour, the presence of adequate infrastructure, the size of the market, the growth potential, the availability of suppliers, and the demand for the products.
After experiencing a slowdown in investment since 2013-14, early signs of revival in capital expenditure (capex) cycle, particularly of the private corporate sector, was seen from 2021-22, supported by a capital expenditure push by the government.
