Karnataka Chief Minister D.V. Sadananda Gowda, who heads a high-level committee that clears investments in the state, got a pleasant surprise in May. Rajasthan-headquartered Shree Cement praised the Chief Minister and his administration in a letter for issuing a government order within 24 hours of clearing its project.
Earlier, such compliments were usually reserved for Gujarat Chief Minister Narendra Modi, also from the BJP. Karnataka, as an official puts it, is following in the footsteps of Gujarat in fast-tracking industrial investments and increasing investor confidence. At a global investors meet, which the government hosted in Bangalore on June 7 and 8, investors put forward proposals worth Rs 7.6 lakh crore.
Investors in Karnataka have often complained about the red tape and corruption in allotment of industrial land, and long delays by government agencies in granting approvals. Entrepreneurs have also said that the government needs to cut the number of approvals needed for a project.
The government says it is trying to address each issue. "Every investor will be assigned a Relationship Officer who will act as the single point of contact," said Gowda, speaking at the investor meet. The new thinking in Bangalore is that an investor should identify land for a project much before the proposal reaches the committee on investments for a decision. To simplify things, in cases where the land required is below 30 acres, the government plans to empower officials to decide on the price.
"We have a voluntary land-surrender scheme under which farmers can offer their land in places we need. The response from farmers to our recent advertisement has been encouraging," says M.N. Vidyashankar, Principal Secretary, Commerce & Industries, Karnataka. To speed things up, the Industrial Land Areas Development Board, which comes under his purview, will itself take approvals from the Pollution Control Board instead of leaving it to the investor.
"We are planning to lay down the timeline within which different authorities would be required to process an investor's application and issue approvals. This will speed up projects," says Chief Secretary S.V. Ranganath. Karnataka is also in the process of creating an online tracking system, and each investor can use it to track the progress of his project.
The government is also citing its sound finances to business leaders. While the Thirteenth Finance Commission requires states to bring their debt to gross state domestic product (GSDP) ratio below 24.2 per cent by 2014, Karnataka met the condition last year itself. Total revenues, including the Centre's share, account for 15.3 per cent of GSDP. The state's own share is 10.1 per cent. "This means that we are in a position to allocate funds for infrastructure on a sustained basis," says L.V. Nagarajan, Principal Secretary, Finance.