Every quarter, the Centre for Monitoring Indian Economy tracks all investment projects presently under implementation. This is a useful resource for measuring inter-state variation in investment. Investment is the foundation of future income growth, so this data shows a sense of how different states will fare in the future. In addition, changes in the performance of states in this regard measure the success or failure of the political leadership in creating a business environment that is supportive of investment.

Measured in nominal rupees, the per capita investment under implementation in India rose from Rs 8,450 in December 1997 to Rs 22,669 in December 2007. This reflected a rise of 112 per cent over the last five years and 168 per cent over the last 10 years.

How have different states fared? We look at progress over the last five years as a proxy for the success of the current political leadership in creating an industry and growth-friendly environment.

The top five states by investment outstanding (per capita) in December 2007 were: Haryana, Orissa, Himachal Pradesh, Gujarat and Jharkhand. These five states are likely to get the fastest GDP growth in the coming two to three years. The bottom five states were: Madhya Pradesh, Rajasthan, Assam, Uttar Pradesh and Bihar. These are the states that are likely to get the slowest GDP growth in the coming two to three years.

The change in investment per capita over the last five years is roughly a measure of the capabilities of the administration and political leadership of the state. The top five states are: Haryana, Jharkhand, Orissa, West Bengal and Gujarat. The leadership of these five states has done a good job of attracting investment and facilitating the implementation of investment plans over the last five years. The bottom five states are: Chhattisgarh, Himachal Pradesh, Tamil Nadu, Bihar and Jammu & Kashmir. While the others are traditionally weak performers, the odd man out here is Tamil Nadu. Tamil Nadu’s rank fell sharply over the last five years. While all-India average investment per capita grew at 112 per cent, in Tamil Nadu it grew by only 15 per cent. This pushed Tamil Nadu down below the all-India average.

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