Political crises following plans to industrialise parts of Nandigram and Singur saw West Bengal slip to 13th position in 2008 from fourth in 2007 in a ranking of India's most investment-centric states, according to a paper published by the Associated Chambers of Commerce and Industry of India.
The state received robust investment announcements worth Rs 2,43,489 crore in calendar 2007. In calendar 2008, investments fell 63 per cent, to Rs 90,095 crore (Rs 900.95 billion).
This sharp drop has mostly been attributed to political unrest over land acquisition that forced the West Bengal government to withdraw plans of a massive chemical hub in Nandigram, three hours from Kolkata, and Tata Motors to relocate its main Nano-manufacturing plant from Singur, an hour from the capital, to Gujarat. Both developments, it is said, may have impacted investor sentiment and caused lasting damage to Chief Minister Buddhadeb Bhattacharjee's plans to revive his state's ailing economy.
The general slowdown in economic growth, however, may also have played a part in Bengal's declining rank, given that many of its major investments were in such sectors as steel, real estate and power, all of which are current casualties of slowing demand.
During calendar 2007 and 2008, steel topped the charts in terms of capital expenditure (capex). In 2007, the state saw Rs 85,200 crore (Rs 852 billion) worth of investment announcements in steel by major domestic players. By 2008, the figure had dropped 72.6 per cent to Rs 23,300 crore (Rs 233 billion).
In 2007, real estate accounted for second-highest investment announcements at Rs 52,929 crore (Rs 529.29 billion). In 2008, real estate was replaced by manufacturing, which attracted capex worth Rs 20,000 crore (Rs 200 billion).
Oil and gas managed to be the third most favourable investment-attracting sector in both 2007 and 2008, but dipped 53 per cent from Rs 42,750 crore (Rs 427.5 billion) in 2007 to Rs 20,000 crore (Rs 200 billion) in 2008.
The fourth highest investment-attracting sector in 2007 was power, with announcements of Rs 26,067 crore (Rs 260.67 billion) for additional generation capacity. In 2008, it was replaced by consumer durables which, however, attracted just Rs 6,000 crore (Rs 60 billion) of investments.
Many of the companies investing in the state in 2007 were among India's largest (see table). In 2007, JSW Steel made the largest investment decision of Rs 35,000 crore (Rs 350 billion) for a 10-million tonnes per annum integrated steel plant at Salboni near Kharagpur.
Other investment majors were DLF, India's largest listed realty company, state-owned Indian Oil Corporation, the country's largest oil marketing company, and Reliance Industries, India's largest company by market value. By 2008, the larger investors had significantly smaller investment plans.