CCI impact partial on stuck projects

Rs 13-lakh crore of infra proposals await Cabinet clearance

After one year of its formation, the Cabinet Committee on Investment (CCI) is described as having unlocked 144 stalled infrastructure projects worth Rs 5.27 lakh crore. However, 253 more, with an investment of Rs 12.82 lakh crore, are still stuck for various clearances.

Most of the pending ones with the Project Monitoring Group (PMG) of the Cabinet secretariat are in the power, coal, steel, petroleum & natural gas, and road transport & highways sectors. PMG looks at only projects worth more than Rs 1,000 crore.

Jindal Synfuels’ coal to liquid (CTL) project worth Rs 77,450 crore and the Tata Sasol CTL project worth Rs 60,000 crore, both in Odisha, are the two biggest projects to be unshackled by CCI. Followed by the Raigarh Expansion Project (Rs 42,345 crore) in Chhattisgarh, the Tilaiya Ultra Mega Power Project (Rs 40,000 crore) and JSPL Pataru Steel Project (Rs 37,367), both in Jharkhand.

The Posco steel plant in Odisha, involving an investment of Rs 52,813 crore, is considered another CCI achievement. Other projects cleared are mainly from the coal and power sectors.

Industry has often raised concerns on hurdles in clearances for infrastructure projects, leading to a slowing in manufacturing and industrial activity. Industrial output contracted for a third month in a row in the previous quarter, by 0.6 per cent, with manufacturing contracting 1.6 per cent. Manufacturing fell 1.9 per cent in the gross domestic  product data for the third quarter   against a one per cent growth in the second one.

However, data with public sector banks (PSBs) on new investment proposals during October-December 2013 shows a silver lining. PSBs received 103 proposals for new projects with an investment of Rs 4.59 lakh crore in the quarter, against 173 projects worth Rs 3.24 crore in the July-September quarter. Each of these projects involves an investment of Rs 250 crore and above.

Most of the new projects (34) came from commercial real estate, involving a total outlay of Rs 30,838 crore. Followed by 19 power projects worth Rs 266,477 crore, 15 road projects worth Rs 13,471 crore, and seven iron & steel projects with an investment of Rs 37,854 crore. The amount sanctioned by banks for these 103 new projects is Rs 24,627 crore. However, as most of the infrastructure projects have long gestation, the real impact will be felt after a gap.

Though there is some movement in infra projects, industry looks forward to strong action on all these aspects to provide an impetus to growth, the Confederation of Indian Industry said in a recent survey. For April-December 2013, fixed investments fell by one per cent, on a weak base of contraction by 0.1 per cent in the same period a year before, said CRISIL.

Thomas Richardson, senior resident representative of the International Monetary Fund here, recently said one key concern is a lack of infra projects in the pipeline. "Even if the CCI is hugely successful in getting stalled projects up and running again, the pipeline of new investment after the stalled projects is really thin. That is the worst effect of the slowdown," he said.