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The investment pipeline appears to have dried up, with a significant slowdown seen in the volume and value of fresh proposals in the past one year. This poses a question mark over the Government’s ambitious plan to garner investments worth $1 trillion to beef up the infrastructure sector alone, during the 12{+t}{+h} Plan (2012-17).
Public and private sector players proposed investments worth Rs 4.4 lakh crore in 2012-13, the lowest since 2005-06 when the investment boom started.
Announcement of new projects amounted to Rs 8.8 lakh crore in 2005-06 and peaked at Rs 23 lakh crore in 2008-09. It averaged at Rs 16.2 lakh crore in 2009-10 and 2010-11, but fell to Rs 10.2 lakh crore in 2011-12.
Acute slowdown
An acute slowdown began to manifest itself in the second quarter of 2012, with the number of fresh proposals dwindling to 378 — less than half the number witnessed in the corresponding quarter of 2011 — and the volume falling by nearly two-thirds to Rs 86,814 crore from Rs 2,24,155 crore. In the December quarter, the volume of committed investments fell to 306 projects and the value declined by 79 per cent to Rs 47,959 crore.
Only 243 projects worth Rs 67,323 crore were announced in the March quarter of 2012-13, according to the CMIE. This was just one fourth of the commitments that were announced the corresponding quarter a year ago.
New projects hit
Coupled with the reduction in fresh investment commitments being made, there was a decline in commissioning of new projects in 2012-13. A total of 1,395 projects worth Rs 3.3 lakh crore were commissioned in 2012-13, but this was a sharp fall from the record high of Rs 4.2 lakh crore in 2011-12.
In the preceding three years, the value of completed projects had hovered at around Rs 3.5 lakh crore on average.
Of particular concern has been a rise in the value of projects shelved in the last two years. From 288 projects worth Rs 1.6 lakh crore in 2010-11, there were 549 projects worth Rs 4.8 lakh crore shelved in 2011-12. This came down in 2012-13, but was still high, with 355 projects worth a cumulative Rs 4 lakh crore put on ice.
There is still some scope for improvement in the numbers, as per the CMIE, which noted that companies often declare information about capacity addition with their annual reports.
It has given an upbeat forecast for project commissioning in 2013-14, estimating that projects worth a cumulative Rs 4 lakh crore are expected to come on stream during the year.
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