THIRUVANANTHAPURAM — Contrary to the general perception, Kerala’s record in attracting investments has been good during the last one-and-half decades since India embarked on economic liberation, according to an AC Nielson-supported study.
Kerala leads in the overall investor friendliness parameters followed by Uttar Pradesh, Maharashtra and Tamil Nadu, according to the latest study by KPMG, the Swiss cooperative and a Big Four auditor, and The Indus Entrepreneurs (TiE), a global agency promoting entrepreneurship.
West Bengal ranks far below Kerala and is rated below the national average along with Delhi, Andhra Pradesh, Rajasthan, Karnataka and Gujarat in the state-wise entrepreneurial confidence index.
While Delhi scored low due to the high expectations of entrepreneurs, UP’s high score is attributed to NCR effect where a large chunk of development is moving from Delhi to the national capital region. The respondent base of UP also consisted primarily of Noida and Ghaziabad.
The study shows that the performance of the southern state has been above the national average and matching the performance of some of the states perceived to be fast growing.
The state that has just 3.5 percent of the total population accounts for around 12 percent of the non-farm jobs generated in India during the last decade.
The findings of the study were discussed at the Media Seminar organized by TiE Kerala and Kerala Global Support Network (KGSG) in association with the Thiruvananthapuram Press Club here recently.
The researchers surveyed 300 entrepreneurs across India to evaluate their perception on finance, governance issues, infrastructure, local environment and ecosystem, manpower and regulatory issues in their respective states.
Kerala emerged the best state for availability of skilled manpower, power at cheapest cost, water, IT infrastructure, telecommunications, banks, institutional lenders, venture capital and private equity as source of funding, entrepreneurial education, law and order, mentoring facilities, tax administration and labor regulations.
Surprisingly, Gujarat, the traditional hub of entrepreneurial activity, received a lower score, probably due to higher expectations of its entrepreneurs, the study says, while Kerala, which is only now focusing on developing its services sector, has minimal additional expectations from its entrepreneurial community.
“The confidence scores of Kerala is much above the national average. In addition, a lower standard deviation also suggests that the state is moving in the right direction of development, as it scores equally well on all parameters,” the study says.
The research found that there is a boom in the services sector in Kerala. The state was benefiting from a policy regime, which is sharply focused on two-three key sectors, like tourism, food processing and IT.
Unemployment in Kerala declined from 19.1 percent in 2002-03 to 9.4 percent in 2006-07 and the state has generated 560,000 new jobs in the last four years, shattering the myth that the state remains to be a “money order economy” supported by its huge population of overseas workers.
Thiruvananthapuram and, to a lesser extent, Kochi, have emerged as popular destinations for IT companies. The state has also witnessed a construction boom, and a sharp growth in the number of small and medium enterprises.