Complications in securing land a hurdle to investments in Karnataka
3 min read 27 Nov 2019, 02:41 PM ISTThe delays have cost Karnataka a chance to convert investments totalling over ₹39,000 crore and chance to create 80,000 jobs, state government data showsOfficials at state industries department say that many of the projects are in the process of being implemented but fail to explain the delay
PremiumBengaluru: Delays in ironing out long winding issues on land availability for industries may have cost Karnataka a chance to convert investments totalling over ₹39,000 crore and a chance to create over 80,000 jobs, state government data shows.
Out of the total 142 proposals totalling ₹49379.13 crore, approved between 2013 and 2019 under section 109 of the Karnataka Land Reforms Act for setting up new projects or existing manufacturing units in sectors like automobiles, textiles, mining among others, over 90 of them remain non-starters including 23 that have been dropped completely.
The delays in acquiring land under this section in which the investor, with the help of the government, deals directly with owners to acquire land, resulting in loss of business for the state even though these proposals have been approved by two high level committees--one headed by the chief minister of Karnataka and the other by the large and medium industries minister. Several industries have opted for land other than the 90000 acres it claims to have in its landbank or what has been acquired by the Karnataka Industrial Area Development Board (KIADB).
While governments announce proposals with fanfare, its inability to see the deal through due to pending approvals and prolonged delays in land conversion not helping contain dipping investor confidence and drying up private investments at a time when the impending slowdown has shaved off a chunk of India’s growth predictions.
In Karnataka, the delays puncturing holes in its ease of doing business ranking, its so-called investor friendly climate, non-starter industrial cluster policy and bringing out the glaring inefficiencies of its single window clearance system.
A total of 72 proposals with investments of over ₹32,000 crore and a potential to create over 58,000 jobs have been delayed or stuck with some or the other complication in either conversion of land or pending approval, data shows. Another 23 proposals with investments totalling around ₹3200 crore and with a potential to create almost 30000 jobs have been dropped completely.
The gap between proposals and realisation of projects is hampering Karnataka and the country’s goal of increasing the share of manufacturing to the gross domestic product and creation of jobs that is at a four decade low.
Industry bodies, economists and bureaucrats say that red tape, corruption and other socio-economic issues often act as insurmountable challenges to investors, especially those buying agricultural land in a state--and country--whose politics commodifies the farming community and its deepening agrarian crisis for electoral dividends.
Officials at state industries department say that many of the projects are in the process of being implemented but fail to explain the delays that dates as far back as 2013.
Muralidhar.D, past president of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI) and who has served in the state planning commission, says that even though the government has liberalised laws in buying land for industries, converting it from agricultural use is fraught with hurdles and challenges.
“It's a cumbersome and complicated process which means a lot of money needs to be paid at various levels," he says, adding that corruption has gone up exponentially in Karnataka.
The data painting a gloomy picture of Karnataka ahead of the unveiling of its new industrial policy and the proposed Global Investors Meet, last held in 2016 but proposals from earlier editions remain just on paper.
Arindam Guha, Partner at Deloitte India says that most of Karnataka’s industrial activity is concentrated in and around Bengaluru where the price to set up shop will be considerably high when compared to other parts of the state.
“In most states, the process of land acquisition by the private sector has been time consuming and politically sensitive," Guha says.
He says that industrial clusters could provide some of the answers but adds that pure small and medium enterprises focused clusters which usually require less land have not been found to be sustainable unless the occupants are part of the supply chain of larger organizations.
