India pitches for investments at Davos amid uneven domestic economic growth

With domestic private investment being weak and foreign direct investment growing slowly, the Centre and state governments have pulled out all the stops for the annual World Economic Forum (WEF), which takes place at the Swiss ski resort of Davos. The country will have two pavilions, one for the Centre and the other for representatives of six states, including three chief ministers. Representing the Centre is Ashwini Vaishnaw, holding important portfolios like railways, information and broadcasting, and information technology, who said he planned to propagate India’s “inclusive growth agenda”. The states that have sent delegates are Maharashtra, Tamil Nadu, Andhra Pradesh, Telangana, Kerala, and Uttar Pradesh. Chief Ministers Devendra Fadnavis (Maharashtra), Chandrababu Naidu (Andhra Pradesh), and Revanth Reddy (Telangana) are attending to hard-sell investment opportunities to foreign investors. There is no doubt that India means business at Davos.

 

Andhra Pradesh, for instance, is reportedly spending Rs 15 crore, with Mr Naidu lining up 19 meetings, plus 50 meetings scheduled by the state’s information-technology minister. Almost all the states have branded their initiatives — such as “#BullishonTN” or “Telangana Rising 2050” — as part of the effort. All of this reflects a proactive urgency of mission and a recognition that there are limits to the amount of heavy lifting the Centre and states can do to keep economic growth ticking over and expand employment opportunities. But questions arise over the utility of these efforts, which involve a significant expenditure of money and time by key state functionaries.

 

Behind the rhetoric of big themes, Davos is undoubtedly known for the opportunities it offers for behind-the-scenes deal-making, so it is possible that these efforts by Indian officials may yield value. But other chief ministerial visits of earlier years have had a suboptimal impact chiefly because of the low priority that India attracts. This year, with the Chinese economy slowing, this could change — Mr Naidu, for instance, is reported to be meeting two heads of states, though who they are has not been specified. At the same time, foreign investors who are being approached may legitimately ask why domestic corporations are shying away from investing in their own country. Instead, domestic outward investment appears to be growing. That apart, each of these states holds annual investment jamborees that traditionally attract eye-catching proposals which rarely translate into shovel-ready projects on the ground.

 

These are facts of which overseas investors are well aware, just as they are of the many impediments to doing business in India — from chronic policy uncertainty to infrastructure constraints. The K-shaped nature of post-pandemic consumer demand may also prove a deterrent, a factor that will certainly count for such emerging businesses as electric vehicles and renewable energy. All the same, the state administrations that have chosen to make investment pitches in Davos must be applauded for making the effort. Yet, with the notable exception of Uttar Pradesh, the other five states are those that are relative racehorses in the investment stakes, Indian or foreign. Their purposefulness begs the question of why other northern states, which urgently need more manufacturing activity to address the problem of poor-quality jobs, are not making a similar effort to attract foreign investment. In a sense, their absence says much about the skewed dynamics of India’s economic progress.