TN, Rajasthan have highest growth potential in auto sector: Assocham

A study by Assocham stated that the states of Tamil Nadu and Rajasthan have the highest growth potential for the automobile industry for adding new and first time customers. Both the states have registered a high growth in employment generation, per capita income and monthly per capita consumption expenditure share in durable goods.

The report further stated that the states are ahead of the national growth in the three key indicators i.e. income, employment and expenditure across 20 major states of India as per a state-wise study titled “Automobile Industry in India: Saturated & Potential States,” released by The Associated Chambers of Commerce and Industry of India (Assocham).

“Besides, Tamil Nadu’s gross domestic product (GDP) and motor vehicles registration growth are also more than the national level growth,” said D S Rawat, national secretary general, Assocham.

In a release, the chamber stated that it's Research Bureau carried out the study as per the relationship cycle designed to ascertain states with higher potential on three basis – employment opportunities generated within different states between 2000-2007, per capita income growth amid states between 2004-2010, this was mainly to ascertain whether states with high employment growth rate also have rising incomes at an individual level or not and finally, to ascertain whether states with rising per capita incomes were actually the ones which incur higher levels on transportation, the ASSOCHAM study looked at household expenditure pattern on durable items and share of expenditure on two-wheelers and four-wheelers for 2009-10.

While, the all-India compounded annual growth rate (CAGR) of employment generation was about 3.7% between 2000-01 and 2007-08, the same in Rajasthan was about 6.8% and in Tamil Nadu was 4.4%. Various other states with an employment generation growth rate more than national level are – Uttarakhand (17%), Himachal Pradesh (13.5%), Jammu and Kashmir (12.4%), Haryana (7.8%), Chhatisgarh (seven%), Karnataka (6.2%), Punjab (6.1%), Odisha (5.3%), Uttar Pradesh (4.7%) and Gujarat (4.7%).

Considering that per capita income growth leads to betterment in living standards, ASSOCHAM study looked at the growth trend in per capita income amid states at constant prices.
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While, India’s per capita income grew at a CAGR of over 6% between 2004-05 and 2010-11, the state level per capita income growth in terms of CAGR for the same period indicates that states of – Tamil Nadu (10.4%), West Bengal (9.7%), Chhattisgarh (9.7%), Jharkhand (9.5%), Punjab (8.7%), Uttar Pradesh (8.1%), Haryana (7.7%), Assam (7.7%), Uttarakhand (6.9%), Kerala (6.7%), Jammu and Kashmir (6.6%), Madhya Pradesh (6.5%), Rajasthan (6.4%), Bihar (6.3%) and Andhra Pradesh (6.1%) enjoyed a higher per capita income growth more than the all-India level.

Further, the monthly transport goods per capita consumption expenditure in all-India level was 29.7% of durable goods expenditure. States having monthly transport goods expenditure share more than all-India figures are – Punjab (52.6%), Haryana (43.1%), Madhya Pradesh (40.8%), Chhattisgarh (40.7%), Bihar (39.5%), Kerala (37.4%), Rajasthan (35.3%), Tamil Nadu (34.4%) and Karnataka (32.4%).

Chhatisgarh, Haryana, Punjab, Rajasthan and Tamil Nadu are common states where per capita income, employment generation growth and monthly transport per capita consumption expenditure’s share in durable expenditure is more than all-India figures, said in the report.