Investment summits: Hype not matched by reality

After freebies, it is investment promises that has been raining down in the last three months. Winter seems to provide the most salubrious climate for holding investor summits, and in just the first two months of 2025, six state governments — Odisha, Uttar Pradesh, Karnataka, West Bengal, Kerala, and Assam — announced investment proposals to the tune of a whopping Rs 60.5 lakh crore.

To put the figure in perspective, barring UP, this year’s annual budget of the remaining five states range between Rs 2.5 lakh crore to Rs 4 lakh crore. UP has the highest budget size of around Rs 8 lakh crore. If the claims of Maharashtra, Madhya Pradesh, Karnataka, Telangana and Andhra Pradesh are added, the investment commitments would be a phenomenal Rs 1 lakh crore and more.

In December 2024, potential investors gathered for the 'Rising Rajasthan' event and pledged Rs 35 lakh crore in investment commitments (the state’s annual budget Rs 5.31 lakh crore). In the same month, the Bihar government, not to be outdone, organised 'Bihar Business Connect', which is said to have attracted investment commitments worth a relatively more modest Rs 1.81 lakh crore (current year’s budget Rs 3.16 lakh crore).

The government of Odisha, which concluded its 'Utkarsh Odisha' on 28 and 29 January in Bhubaneswar, secured investment commitments worth Rs 12.89 lakh crore, which is 1.4 times its GDP and almost five times the size of its annual budget.

It seems too good to be true. Neither the slowing economy, declining private consumption, the FMCG stocks taking a hit in the capital market, nor growing uncertainties and rise in defaults in paying back personal loans have had any effect on investors. The hype is just not borne out by the buzz on the ground.

From ‘Vibrant Gujarat’ to ‘Magnetic Maharashtra’, on an average 10 to 15 per cent of the commitments claimed seem to get translated into actual projects. There are no post-summit audits, no audit has been done of the summits by the Comptroller and Auditor General of India and hence the actual figures of failed commitments are not really known.

Summits have become less businesslike and increasingly look like political events by respective governments to make impossible claims and pat themselves on the back. No state government has ever bothered to bring out an annual report detailing proposals translated on the ground. The budget too remains silent on this aspect.

Year after year, the summits are attended by a familiar set of industrialists and their representatives. They follow the script and praise the political leadership and the potential of the states concerned. Public money is splurged on advertisements, entertainment programmes, cultural shows showcasing the state and in arranging visits by delegates to places of tourist attraction.

In short, everyone has a good time. The events are utilised to lobby for land, subsidies, incentives, licenses and for networking with officials and politicians. MoUs in any case are merely expressions of intent, are not legally binding and cannot be enforced. With state governments showing no urgency to list companies which have failed to honour their commitments, it is not clear how many such companies reappear and make more commitments which they may have no intention to fulfil.

Some states have also taken their investment summits overseas. At the World Economic Forum (WEF) in Davos in January 2025, Maharashtra claimed to have signed MoUs worth Rs 15.7 lakh crore, Telangana signed MoUs for Rs 1.78 lakh crore and Andhra Pradesh chief minister, N. Chandrababu Naidu announced that his state was looking at a Rs 10 lakh crore investment commitment.

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“What is the outcome of the past six summits held during the Shivraj Singh Chouhan government?” asked former Madhya Pradesh chief minister Digvijay Singh after the latest Global Investors’ Summit in late February, 2025. “The government is squandering crores of rupees on these summits but the return is pretty much nil. It’s just an attempt to felicitate BJP-backed industrialists to forge closer associations with the bureaucrats and politicians,” he added. 

To the embarrassment of the state government, former Union minister and former chief minister and BJP leader Uma Bharti also voiced her scepticism at the tall talks. “The signed MoUs can only translate into reality if officials follow them up while framing policies required to facilitate the investment… these promised industrial developments should be a judicious combination of Jawaharlal Nehru’s pro-industrial development model and Mahatma Gandhi’s panchayat-centric development,” she added.

The comments came in the wake of the seventh edition of the Global Investor Summit on 24 and 25 February in Bhopal. The state government claimed to have secured investment proposals worth Rs 30.77 lakh crore and participation of over 25,000 delegates from over 60 countries. If video clips showing unlikely ‘delegates’ scrambling for food, jostling with each other and breaking crockery caused any embarrassment, it was quickly brushed aside and dismissed as inconsequential.

The Madhya Pradesh government had already held seven regional conclaves, six road shows, included several foreign visits by the chief minister and officials and also interactive sessions with industrialists last year.

On the face of it, the state appeared to be doing its homework before the GIS. The ‘Global’ summit was a high-octane affair, with Prime Minister Narendra Modi and Union home minister Amit Shah in attendance. Chief minister Mohan Yadav claimed over 21 lakh employment opportunities would be created once the proposals came through.

Officials claimed that during the two-day GIS-Bhopal event, more than 85 memoranda of understanding (MoUs) were signed including those from the Adani Group across various sectors. Madhya Pradesh, they claimed, had emerged as the third-highest state in the country in terms of receiving investment proposals in a single financial year.

The government also claimed it has secured foreign investment worth Rs 31,851 crore in Bhopal, Dhar, Indore, and Narmadapuram districts in IT, renewable energy, engineering and auto components sectors.

Gujarat Samachar, in a report published in December 2023, claimed that of the 1.4 lakh MoUs signed at the nine 'Vibrant Gujarat' summits held between 2003 and 2019, about 25,975 were dropped by the Gujarat government itself. Reasons for rejection ranged from the dubious and deteriorating financial condition of the companies, time and system lapses in acquiring land, delays in availing permits from pollution, fire etc.

Approximately 35 per cent of the MoUs were dropped for various reasons, while 20 per cent of the proposals were yet to commence, the report added. What is more, 20,000 or more MoUs in the education sector had no monetary investment involved but were categorised as MoUs.

According to a statement made in the Gujarat Assembly on 15 September 2023, Rs 21,557 crore was invested against MoUs promising an investment of Rs 9.45 lakh crore signed between August 2021 and July 2022. The situation is unlikely to be different in other states.

In the wake of the GIS in Bhopal, the Congress released a document titled 'Madhya Pradesh Investment Summit: Promises, Claims and Reality'. “Even after being in power for over 20 years in the state, BJP leaders continue to blame the Congress for 'backwardness',” said leader of the Opposition in the assembly Umang Singhar.

"Between 2003 and 2016, MP received investment proposals of more than Rs 17.50 lakh crore in the first five investors' summits. At the GIS 2023 in Indore, the Shivraj Singh Chouhan government claimed an investment of about Rs 15.40 lakh crore in the state. That is, an investment of about Rs 32 lakh crore in all. The reality is that from 2003 to 2023 only Rs 3.47 lakh crore were actually invested in the state,” claimed the document.

The BJP leaders scoffed at the criticism, daring Congress leaders to account for investment made in the state before 2003. Madhya Pradesh had shed its BIMARU tag under BJP rule, claimed BJP state president V.D. Sharma.

Forget about the hype or the hoax, it is really becoming a bit of a joke, conceded a retired bureaucrat, in the absence of post-summit audits.