Goa must take corrective steps to attract investments: Assocham study

Study said that predictability and stability were lacking in the state

Goa should take corrective measures and facilitate ease of doing business to encourage confidence in investor community in the wake of falling investments, says a study.

"Goa has virtually failed to attract investments as year-on-year growth rate for inflow of new investments dipped to about nine per cent in 2015-16 from a level of over 91 per cent in 2014-15, probably due to a fluid economic situation prevailing in the state," says a study titled 'Goa: Economic & investment scenario' by Assocham.

"Predictability and stability is an important condition for continuous flow of investments and looking at this trend, it seems both are seriously lacking in Goa," the study said.

"A region with better economic growth and more policy initiatives with effective implementation can encourage more investors," it added.

As of FY16, Goa attracted outstanding investments of about Rs 26,000 crore, including all projects under various stages of announcement or implementation. However, the growth in outstanding investments has not been able to pick up.

During the period between 2011-12 and 2015-16, barring 2014-15, there is no other year wherein the outstanding investments growth has been able to touch double digits.

"Outstanding investment growth rate had fallen to 7.5 per cent in 2015-16 from over 23 per cent in 2014-15," it said.

Though outstanding investments attracted by Goa have grown at a compounded annual growth rate (CAGR) of nine per cent during 2011-12 and 2015-16, only the services, and the construction and real estate sectors have recorded positive growth rate of about 12 and 11 per cent, respectively.

However, CAGR of manufacturing and electricity sectors have recorded negative growth of about eight per cent and 32 per cent, respectively.

"Declining investments into power sector can dampen the spirits of investor community as energy consumption is positively linked to economic growth, especially manufacturing constituents like cement and steel," the study noted.

Implementation of investment projects is also a worrying factor in Goa as projects, with over 58 per cent of investments, are under different stages of implementation.

Goa needs to adopt a better strategy for growth and fiscal management, the study said.

Assocham has suggested the state to come up with more inclusive tourism policies and programmes to take the momentum forward and derive better synergy of tourism and development.

It has also said that policy initiatives towards promotion of cashew grower's cooperatives will definitely widen their perspective.