investment skyline of india
DESCRIPTION
A report to identifying the best states in the country for investment purposeTRANSCRIPT
Investment Skyline of India Investors' guide to the states of India
Indicus Analytics
Mumb ai 24 August, 2009
Investment Skyline of India is a guideline to the investors for identifying the best states in the country for investment purpose. We plan to take 8-10 broad parameters every quarter andidentify the best states for investment in terms of those parameters. The first issue looks atselected demographic, infrastructure and market related parameters and identifies the 5 top states in the country for investments, for each of the parameters.
Methodology
Our purpose is to identify 5 leading states based on several relevant indicators that reflectinvestment friendliness. We have captured the state’s position for individual variables as wellas collectively through constructing a composite index that accounts for all the variables. Thespecific indicators that have been selected for the inaugural issue are:
1. Urbanization process
2. State income
3. Capital formation
4. Infrastructure availability related to power
5. Infrastructure availability related transportation
6. Telecom facilities
7. Health infrastructure
8. Educational infrastructure
9. Market size
To depict the position of each state regarding individual variable, we computed median valuefor each of these variables. As the next step an index was formed taking the median value as 100 and the top 5 states have been identified based on the index value. To arrive at the final composite index that includes all the variables, we assigned equal weight to each variable. The composite value is the linear combination of each of these variables. After obtaining the composite value, we computed the median. The final index was formed based on the composite values considering the median value as 100.
Additionally, we have mapped the fastest growing districts, in terms of GDP growth over 5 years to identify the emerging pockets of interest for investors.
The Top 5 States in India Based on Final Composite Index
As clearly suggested by the graph below, Maharashtra emerges as the best possible state for investment purpose. The investment friendliness of the rest of the four states are almost equi- level. However, a few other states with closer final composite index value are Karnataka, WestBengal and Uttar Pradesh.
Top 5 States of India for Investment Purpose
186 190 191 207
324
0
50
100
150
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300
350
Delhi AndhraPradesh
Tamil Nadu Gujarat Maharashtra
Com
posi
te In
dex
Urbanization process Urban population (1st table and figure) In terms of the size of urban population in the state, Maharashtra is the top ranking states. However, as per expectation, the bigger states find their place in the top 5 ranks in terms of this indicator. State’s share to India’s total urban population (2nd table and figure) Contribution of these 5 top ranking states is exactly half of India’s total urban population. This clearly suggests that the metro cities, namely, Mumbai, Chennai, Kolkata and Hyderabad play a major role in shaping India’s urban population concentration. Urban growth (3rd table and figure) It is important to notice that Goa and Mizoram, two smaller states of the country, figure among the top 5 states in terms of urban growth. Along with a faster penetration of urbanisation, smaller urban base in these state is a major force behind this pattern.
318 348462
572666
2288
0
500
1000
1500
2000
2500
Andhra Pradesh
West Bengal
Tamil Nadu
Uttar Pradesh
Maharashtra Other states
Inde
x val
ue
Top 5 States ‐ Urban Population
State Rank Maharashtra 1 Uttar Pradesh 2 Tamil Nadu 3
West Bengal 4 Andhra Pradesh 5
States Rank Maharashtra 1
Share of Top 5 States in Total Urban Population
Andhra Pradesh7% West Bengal
7%
Tamil Nadu10%
Uttar Pradesh12%
Maharashtra14%
Other states50%
Top 5 States - Urban growth
177
198 204215
374
115
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50
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250
300
350
400
Maharashtra Tamil Nadu Mizoram Goa Delhi India
States
Gro
wth
Inde
x
State income Gross State Domestic Product (GSDP) (1st table and figure) Being the financial and commercial hub of the country, Maharashtra is well ahead of other states. Apart from the 5 top ranking ones, Tamil Nadu and Karnataka can also be considered in the same league. State’s share in India’s Gross Domestic Product (2nd table and figure) The top 5 states account for 40% of the total GDP of the country. However, concentration of major economic activities in a few states is established further with the fact that the next 5 states contribute 37% to country’s GDP while the balance 18 states account for 23%. Average annual growth over last 5 years (3rd table and figure) The smaller states show faster growth in terms of state income mainly due to their small base of GSDP. Haryana is the only exception, which has been witnessing fast pace of expansion in economic activities, especially in cities adjacent to Delhi such as Gurgaon, Faridabad etc.
Uttar Pradesh 2
Tamil Nadu 3
West Bengal 4
Andhra Pradesh 5
States Rank
Mizoram 1
Maharashtra 2
Goa 3
Tamil Nadu 4
Delhi 5
States Rank
Maharashtra 1
Uttar Pradesh 2
Andhra Pradesh 3
West Bengal 4
Gujarat 5
Top 5 States- Gross State Domestic Products
270 278 291 333
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2523
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3000
Gujarat West Bengal Andhra Pradesh Uttar Pradesh Maharashtra Other states
StateIn
dex
valu
e
Top 5 State‐ Share in Country's GDP
Gujarat6% West
7
tesMaharashtra
12%
120 122 125
160
190
115
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40
60
80
100
120
140
160
180
200
Uttaranchal Nagaland Haryana Jharkhand Manipur All-India
Inde
x Val
ue
States
Top 5 States - Average Annual Growth for Last 5 Years
Capital formation Gross Fixed Capital Formation (GFCF) (1st table and figure) The developed states in terms of industrial activities have figured in the top ranking states. It is important to mention that Andhra Pradesh, Chhattisgarh and Haryana are close competitors to Uttar Pradesh. West Bengal, one of the important relatively industrialised states in the country, ranks 11. State’s contribution to India’s total capital formation (2nd table and figure) The top 5 states contribute as high as 57% to India’s total capital formation. The share of top 10 states is 80% of the country’s GFCF.
States Rank Maharashtra 1
Uttar Pradesh 2
Andhra Pradesh 3
West Bengal 4
Gujarat 5
States Rank
Manipur 1
Jharkhand 2
Haryana 3
Nagaland 4
Uttaranchal 5
Top 5 State - Gross Fixed capital Formation
235278
393452
628
1459
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1400
1600
Uttar Pradesh Karnataka Gujarat Tamil Nadu Maharashtra Other states
State
Inde
x Va
lue
Uttar Pradesh7%
Karnataka8%
Gujarat12%
Tamil Nadu13%Maharashtra
18%
Other states42%
Top 5 States ‐ Share of India's Total Gross FIxed Capital Formation
Infrastructure availability related to power Connected load for industrial usage (1st table and figure) The most industrialized states of the country figure in the top 5 in terms of power consumption for industrial usage. Punjab, Rajasthan and Uttar Pradesh are close followers to these 5 states. Share in India’s total load for industrial usage ((2nd table and figure) 56% of the total connected load for industrial usage comes from these top 5 states. Number of consumers for industrial usage (3rd table and figure) In terms of number of consumers, West Bengal is an inclusion in the list. This might be due to the fact that small scale industries are quite prevalent in the state. Share in country’s total consumer for industrial usage (4th table and figure) Maharashtra itself accounts for 17% of the total consumers for industrial usage. However, an increase in share compared to previous indicator in case of Maharashtra as well as Gujarat in the total pie reflects a mix of both large as well as smaller industrial units in these states.
States Rank
Maharashtra 1
Tamil Nadu 2
Gujarat 3
Karnataka 4
Uttar Pradesh 5
States Rank
Maharashtra 1
Tamil Nadu 2
Gujarat 3
Karnataka 4
Uttar Pradesh 5
363
561 578
751887
2428
0
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1000
1500
2000
2500
3000
Karnataka Andhra Pradesh Gujarat Tamil Nadu Maharashtra other states
Inde
x V
alue
State
Top 5 States - Connected Load For Industrial Use
Karnataka7%
Andhra Pradesh10%
Gujarat10%
Tamil Nadu13%Maharashtra
16%
other states44%
Top 5 State - Contribution to Country's Total Connected Load for Industrial Use
645 699887 954
1383
3670
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3500
4000
West Bengal Andhra Pradesh Karnataka Gujarat Maharashtra Other States
Inde
x Va
lue
States
Top 5 States - Consumers of Industrial Usage of Power
States Rank
Maharashtra 1
Tamil Nadu 2
Gujarat 3
Andhra Pradesh
4
Karnataka 5
States Rank
Maharashtra 1
Tamil Nadu 2
Gujarat 3
Andhra Pradesh
4
Karnataka 5
States Rank
Maharashtra 1
Gujarat 2
Karnataka 3
Andhra Pradesh
4
West Bengal 5
West Bengal8%
Andhra Pradesh8%
Karnataka11%
Gujarat12%Maharashtra
17%
Other States44%
Top 5 States - Consumers of Industrial Usage of Power
Infrastructure availability related to transportation Projected expenditure on roads and bridges – 2005–10 (1st table and figure) Maharashtra again shows its prominence as India’s most favoured investment destination. However, the pattern also suggests a better and developed road network in the western and southern part of the country. Share of total projected expenditure on roads and bridges (2nd table and figure) These 5 states share almost 50% of the total projected expenditure on roads and bridges of the country. For obvious reason these listed stated have a fast mover advantage over others. Rail density (3rd table and figure) States located between important destinations show higher rail densities. However, it is important to mention here that almost all the hill states of the country do not have any significant railways network. Total railway route length (4th table and figure) In terms of total route length, as expected the bigger states in terms of area have figured as the top 5 raking ones. However, Madhya Pradesh, West Bengal and Tamil Nadu are close to the leading group. Share in India’s total railway route length (5th table and figure) These 5 states share 47% of the total railway route length of the country. However, as mentioned earlier, exclusion of all the hill states due to non-availability of railway coverage is an important reason for the large share in favour of these 5 top ranking states.
States Rank
Maharashtra 1
Gujarat 2
Karnataka 3
Andhra Pradesh
4
West Bengal 5
232270
331385
498
1833
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1600
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2000
Gujarat Tamil Nadu Andhra Pradesh Uttar Pradesh Maharashtra Other states
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States
Top 5 States - Projected Expenditure on Roads and Bridges 2005-10
Gujarat6%
Tamil Nadu8%
Andhra Pradesh9%
Uttar Pradesh11%
Maharashtra14%
Other states52%
Top 5 States - Share in Countries Total Projected Expenditure on Roads and Bridges
Top 5 States - Railway Route Length
326 331 346 366
535
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Andhra Pradesh Gujarat Maharashtra Rajasthan Uttar Pradesh Other states
State
Inde
x Va
lue
States Rank
Delhi 1
West Bengal 2
Punjab 3
Haryana 4
Bihar 5
States Rank
Delhi 1
West Bengal 2
Punjab 3
Haryana 4
Bihar 5
States Rank
Uttar Pradesh
1
Rajasthan 2
Maharashtra 3
Gujarat 4
Andhra pradesh
5
States Rank
Uttar Pradesh
1
Rajasthan 2
326 331 346 366
535
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1500
2000
2500
Andhra Pradesh Gujarat Maharashtra Rajasthan Uttar Pradesh Other states
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x Va
lue
State
Top 5 States - Railway Route Length
Andhra Pradesh8% Gujarat
8% Maharashtra9%
Rajasthan9%
Uttar Pradesh14%
Other states52%
Top 5 States -Share In Country's Total Railway Route Length
Telecom facilities Teledensity (1st table and figure) The reason for showing major metro cities along with top 5 states is exclusion of these cities from their respective states and inclusion of one state into another in case of a few big states in the available data. However, it suggests that the states to which these cities belong, would have much higher Teledensity if these cities were included. Internet usage- Number of registered domain (2nd table and figure) Delhi is undoubtedly the leader as far as registered domains are concerned. However, West Bengal and Tamil Nadu are also high in domain registration since the index values are close to some of the top 5 states. The share of Delhi in domain registration is as high as 20%.
Maharashtra 3
Gujarat 4
Andhra pradesh
5
States Rank
Uttar Pradesh
1
Rajasthan 2
Maharashtra 3
Gujarat 4
Andhra pradesh
5
16.98 17.0618.78
25.5427.61
33.7
56.73
61.08
65.4
12.74
0
10
20
30
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60
70
Gujarat Karnataka Himachal Pradesh
Kerala Punjab Kolkata Mumbai Chennai Delhi India
Tele
dens
ity
States
Top 5 States and 4 Metro Cities - Teledensity
332405 413
495
1253
3258
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3500
Kerala Andhra Pradesh Karnataka Maharashtra Delhi Other states
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x Va
lue
State
Top 5 States - Registered Internet Domains
States Rank
Punjab 1
Kerala 2
Himachal Pradesh
3
Karnataka 4
Gujarat 5
States
Registered Internet Domains
Delhi 1
Maharashtra 2
Karnataka 3
Andhra Pradesh
4
Kerala 5
Kerala5%
Andhra Pradesh7%
Karnataka7%
Maharashtra8%
Delhi20%
Other states53%
Top 5 States - Registered Internet Domains
Health infrastructure Public Health Centres (PHC) and Community Health Centres (CHC) Per Million Population(1st table and figure) In the hill districts the density of PHCs and CHCs are much higher than the states of the plains. Rugged terrain and inaccessibility has prompted the Government to establish the basic health facilities to these areas. Government hospitals per million population (2nd table and figure) Apart from the hill states, Delhi and Goa figure amongst the top 5 states in terms of density of Government hospitals. Delhi has the advantage of being the capital of the country while the proactive role of the state government surely been the case of Goa. Number of available beds in government hospitals per Million population (3rd table and figure)
Gujarat and Orissa are the inclusions amongst top 5 states from the plain region.
States Rank
Uttaranchal 1
Arunachal Pradesh
2
Himachal Pradesh
3
Mizorm 4
Meghalaya 5
210 278
324 399
1,739
95
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800
1,000
1,200
1,400
1,600
1,800
2,000
Meghalaya Mizoram Himachal Pradesh Arunachal Pradesh Uttaranchal All India
Inde
x V
alue
State
Top 5 States- Number of PHCs and CHCs Per lakh Population
Top 5 States - Government Hospitals PerMillion Population
196 196
255264
397
92
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150
200
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300
350
400
450
Nagaland Delhi Goa Arunachal Pradesh Sikkim India
State
Inde
x Va
lue
States Rank
Sikkim 1
Arunachal 2
Goa 3
Delhi 4
Nagaland 5
Top 5 States - Government Hospital Beds Per Million Population
341
483
610 619
699
139
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100
200
300
400
500
600
700
800
Gujarat Orissa Sikkim Arunachal Pradesh Nagaland IndiaState
Inde
x Va
lue
States Rank
Nagaland 1
Arunachal Pradesh
2
Sikkim 3
Orissa 4
Gujarat 5
Educational Infrastructure Education Development Index (1st table and figure) Kerala emerges as the top ranking state in terms of education development index. Though none of the north-eastern states have figured in the top 5, all of them show high education development index. Literacy ( 2nd table and figure) The trend from literacy distribution is very similar to that of education development index. Apart from the top 5 states, all the north-eastern states show high literacy level. However, amongst the developed states, Maharashtra, Tamil Nadu and Punjab have higher literacy rates compared to the rest.
States Rank
Kerala 1
Delhi 2
Tamil nadu 3
Himachal Pradesh
4
karnataka 5
Top 5 States- Education Development Index
111
116
121
124
126
100
105
110
115
120
125
130
Karnataka Himachal Pradesh Tamil Nadu Delhi Kerala
State
Inde
x Va
lue
States Rank
Kerala 1
Mizoram 2
Goa 3
Delhi 4
Himachal Pradesh
5
113
125 127
145 147
102
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120
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160
Himachal Pradesh Delhi Goa Mizoram Kerala All India
Inde
x Va
lue
State
Top 5 States - Literacy Rate
Market Potential market size (3rdnd table and 3rd figure) The bigger states have figured in the list of top 5 states. However, Tamil Nadu and Karnataka are not far behind. Share in total potential market size (4th table and 4th figure) These 5 states contribute to about 75% of the total potential market size of the country. Maharashtra itself has a share of 25%. The potential market size of the bottom 15 states is about only 8% of the total. Potential market size for consumer durables (1st table and 1st figure) Similar to the trend observed in case of total market size, the bigger states figure in top 5 list. The exception is Kerala, perhaps on account of remittance the state receives from overseas. The top 5 states account for about 50% of the potential consumer durables market of India. The bottom 10 states account only for about 10% of the consumer durables market.
States Rank
Maharashtra 1
West Bengal 2
Uttar Pradesh
3
Kerala 4
Gujarat 5
310 313 356 363
685
1978
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2500
Gujarat Kerala Uttar Pradesh West Bengal Maharashtra Other States
Inde
x Va
lue
State
Top 5 States - Potential Market for Consumer Durables
States Rank
Maharashtra 1
West Bengal 2
Uttar Pradesh
3
Kerala 4
Gujarat 5
Gujarat8%
Kerala8%
Uttar Pradesh9%
West Bengal9%
Maharashtra17%
Other States49%
Top 5 States - Market Share for Consumer Durables
Gujarat
Kerala
Uttar Pradesh
West Bengal
Maharashtra
Other States
States Rank
Maharashtra 1
West Bengal 2
Uttar Pradesh
3
Andhra Pradesh
4
Gujarat 5
263 270 284 294
543 543
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100
200
300
400
500
600
Gujarat Andhra Pradesh Uttar Pradesh West Bengal Maharashtra Other states
Inde
x Va
lue
States
Top 5 States - Total Market Size
States Rank
Maharashtra 1
West Bengal 2
Uttar Pradesh
3
Andhra Pradesh
4
Gujarat 5
Gujarat12%
Andhra Pradesh12%
Uttar Pradesh13%
West Bengal13%
Maharashtra25%
Other states25%
Top 5 States - Share in India's Total Market Size