Monday, January 30, 2017

Stalled projects update

Livemint points to latest CMIE data to show that year-end stalled projects touched a record high by end-2016. The total value of stalled projects was Rs11.70 trillion at this time, accounting for 12.11% of the total projects under implementation.
As to the reasons for stalled projects, a fifth were due to delays in clearances. And its share has remained consistently high despite the governments best efforts to clear stalled projects.  

The failure to make much progress with declogging stalled projects has been accompanied by a decline in new public investment announcements.
This blog has argued that a very large proportion of these projects are not stalled but are fundamentally unviable projects, at least now. They may need to be scrapped and not restored. The true extent of such projects need to be recognised based on both commercial considerations and changed circumstances. A cleaner slate may be a more meaningful place to start monitoring. 

Add to this, the just released RBI's Industrial Outlook Survey of 1221 manufacturing enterprises indicated declining business expectations sentiment in the Q4 2016
Whatever the budget announces, this is unlikely to improve any time soon.

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