Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusinessEconomy

Dip in stalled projs; new investment projs yet to pick-up

The government has managed to bring down the number of "stalled projects" to its lowest level in over three years, but any pick-up in new investment projects is still a few quarters away, a new survey has found.

July 05, 2015 / 02:12 PM IST

The government has managed to bring down the number of "stalled projects" to its lowest level in over three years, but any pick-up in new investment projects is still a few quarters away, a new survey has found. "Since March 2014, projects worth about 2 per cent of GDP have been unstalled. Progressing steadily, they have now reached a critical mass and can potentially start impacting domestic activity notably," HSBC said in a research note.

However, new projects are "proving to be as stubborn as anemic bank credit" and the number of such projects fell to its lowest level in a year during the April-June quarter. "What do these conflicting signals imply? The simple answer would be that the government is doing all this unstalling, but that does not seem to have any muscle. "No new investments are arising.

But we argue differently," HSBC's Chief India Economist Pranjul Bhandari said in her report. Stating that the trends could be actually positive, Bhandari said "Right now, resolving a substantial number of stuck projects could in itself trigger notable investment spending. New projects perhaps are still a few quarters away, maybe as elusive as banking credit growth." April to June data marks the fifth consecutive quarter over which stalled projects have fallen.

Moreover, unstalled activity so far has been faster for government projects. An HSBC analysis of 555 stalled projects suggests that there is still ample government action needed to unstall remaining stuck projects, as "about half of them are stuck due to policy related issues". "Executive action on fast-tracking clearances and sorting out raw material availability is still needed, especially so for private sector projects which haven't seen as much unstalling," HSBC said.

Moreover, legislative success on the land acquisition bill will also be important, though probably will take longer to get passed. So, several more quarters of hard work is needed to salvage stalled projects which have potential to start again, it added.

first published: Jul 5, 2015 02:12 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347