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1,550 projects with investments worth about Rs 26.5 lakh crore stuck in different stages: ASSOCHAM

01 Jun 2015 Evaluate

Industry body, the Associated Chambers of Commerce & Industry of India (ASSOCHAM) has raised an alarm bell with its latest study, saying that 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 on issues such as land acquisition and lack of funds. In a study titled ‘A Comparative Analysis of Investment Pattern in States,’ conducted by the industry body it was stated that 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.

ASSOCHAM noted that lack of clearances, unfavourable market conditions, lack of promoter interest and poor supply of raw material were the major reason for stuck projects both public and private. Secretary general of ASSOCHAM said that “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.” He added that 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.

The study highlighted that 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). It added that 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.

The study conducted by Economic Research Bureau (AERB) of ASSOCHAM has added that 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.

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