Over 1,550 projects with investments worth about Rs 26.5 lakh crore remained stuck in different stages as on December 2014 across major 21 states in India, noted a just-concluded study by apex industry body Assocham.
“There were a total of 16,966 live projects with investments worth over Rs 154 lakh crore attracted by various sectors from both public and private sources as on December 2014,” noted the study titled ‘A Comparative Analysis of Investment Pattern in States,’ conducted by the Associated Chambers of Commerce and Industry of India (Assocham).
“Stuck projects have been a major concern for policymakers as not only their cost is very high to the economy but also because it significantly impacts investor sentiments,” said Mr D.S. Rawat, Secretary General of Assocham while releasing the findings of the chamber’s study.
“Stuck investments have an evident effect of lowering the growth rate, besides stuck projects will have implication on cost of investments in real term and that will raise the capital-output ratio, an effect which can spread to other sectors as well,” said Mr Rawat.
“Infrastructure sector accounted for lion’s share of about 45 per cent of stuck projects followed by manufacturing (28 per cent), housing construction (14 per cent), electricity generation (12 per cent) and irrigation (two per cent),” highlighted the study prepared by the Assocham Economic Research Bureau (AERB).
Lack of clearances (both environment and non-environment) accounted for major share of 12.5 per cent amid key reasons behind stuck projects followed by land acquisition problems (11 per cent), unfavourable market conditions (10 per cent), lack of funds and promoter interest (nine per cent each), poor supply of fuel/feedstock/raw material (four per cent), natural calamity (one per cent) and others.
Amid stuck projects, implementation of over 51 per cent was stalled while 37 per cent remained under implementation, over six per cent were in announcement stage and there was no information of the remaining six per cent, further observed the Assocham study.