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Lined-up projects enough to support growth for years even if no fresh investment, say CMIE data
MALINI BHUPTA, RAJESH BHAYANI & KATYA NAIDU
Mumbai, 18 April
POSITIVE INDICATIONS
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New projects
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Projects completed
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Projects shelved
n a season of bad news, the Centre for Monitoring the Indian Economy (CMIE) has sprung a pleasant surprise. In its latest data, the research body has said projects worth ~4 lakh crore were completed in FY12, the highest in the last few years. In the previous couple of years, the corresponding numbers were ~3.4 lakh crore and ~3.8 lakh crore, respectively. Theres more good news: the existing pipeline of projects is strong enough to sustain for the next several years. And, FY12 has seen a dramatic pick-up in completion of some of those outstanding projects. According to CMIE, at the end of March 2012, outstanding investment in projects amounted to ~140 lakh crore. That is six times the countrys annual gross fixed capital formation. The pipeline of outstanding projects is so large that even if no new project is announced for the next four-five years, the Indian economy can continue to grow at a brisk pace. It is for this reason that the completion of outstanding projects is a far more critical number to watch out for than new projects. Theres no doubt that outstanding investments may, however, continue to
~ crore
No.
~ crore
1,575 3,15,329*
2010-11. CMIEs analyst team expects the number to double to ~8.3 lakh crore in 2012-13, if the completion rate goes up to 100 per cent. Given the issues faced by the corporate sector, not many are convinced by the pick-up in activity. A Subba Rao, CFO of GMR, said, The slowdown in investment is a ground reality today. Across all sectors, everyone is wondering how to translate projects in the pipeline to execution. In infrastructure, power sector has the potential to attract the most investment, but it is plagued with problems. Going slow on new projects is a natural consequence to these problems. Debashish Mishra, senior director, Deloitte Touche Tomatsu, believes, There has been a slowdown in infrastructure investment. Many projects initiated earlier are stuck in environment and other clearances. Earlier, the Planning Commission was hoping infrastructure spending would be $120150 billion annually. We would be lucky if we get around $60 billion this year. Theres little progress on infrastructure bids like ultra mega power projects or the Navi Mumbai Airport.
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