- One of the most common events for any state government in India is the clamouring for laying the red carpet to prospective investors and eliciting commitment from them to invest in their respective states. As the moniker – Global Investors Meet/Summit – associated with such an event suggests, the endeavour is to attract investors from around the world to respective states by offering incentives, an easy way of doing business, single-window clearances, avoidance of red-tapism, and promise of a desired number of skilled workers/professionals to set up shop. The signing of a memorandum of understanding (MOU) between the prospective business houses and the government assumes significance for the latter which is used to score political brownie points.
PC: Deccan Hardel
- The moot point to ponder over here is whether the signing of MOUs citing prospective investment by several state governments of huge money will ultimately fructify. Will the inked deal ensure the business houses pump in big money and the government goes out of its way to clear the way for the project to kickstart? Let’s dwelve deep to comprehend the phenomenon. Recently, Elon Musk, master of rocket flying, has called out Trump’s other friends for kite flying. Shortly after Trump announced a $500bn AI infra project called Stargate – the largest in history – on his second day in office, Musk claims on good authority that SoftBank, which is responsible for the financial side, has well under $10bn secured. He’s been rebutted of course.
PC: The Crypto Times
- OpenAI, Microsoft, and Oracle opened their wallets to reveal $101bn in ready cash; SoftBank is said to have another $24.3bn on its balance sheet. But don’t they have other fish to fry? Musk, despite his very public animus towards OpenAI’s Sam Altman, might be onto something here. Remember Trump’s 2017 announcement about a $10bn Foxconn factory in Wisconsin that didn’t materialize? Musk deserves applause and it would be good if leaders in India also sometimes let light escape from the black hole of investor summits and billion-dollar MOUs that seem to have the shelf life of a birthday greeting card. Three states viz. Maharashtra, Andhra, and Bengal in recent times announced proposals worth half a trillion dollars.
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- Other states are also in the game. How much investment actually happens in India though? Govt data shows gross fixed capital formation rose from about 33L cr ($381bn) in 2014-15 to 54L cr ($624bn) in 2022-23. The record for one quarter is 15.7L cr ($182bn). Nonetheless, it also includes investment by govt, so clearly the investor summit MOUs are worth little more than their weight in paper. While states maintain opacity around MOU conversion rates, the reality sometimes slips out in headlines. Note that 90 of 1,045 MOUs (8.6%) signed at the 2018 UP summit had translated into investments over two years. In Haryana, 36% of MOUs signed at the 2016 summit materialized by 2024. It’s mere tall claims by the states but does not fructify on the ground.
