Andhra paints a grim picture in implementation of projects: Assocham

Over 49% projects have not even strarted in the state

Andhra Pradesh paints a grim picture vis-à-vis implementation of investment projects. Over 49% projects have remained non-starter. Of these, about 28.5% projects are in announcement stage, while implementation of about 7% projects has been stalled and there is no information about projects comprising 13.5% share in total outstanding investments, according to the Associated Chambers of Commerce and Industry (Assocham).

Most of the investment projects attracted by AP were facing significant delays in implementation owing to a plethora of reasons like land acquisition delays, fund constraints, delay in environmental and other clearances along with law and order problems. "The new government must focus more on implementing the delayed projects on priority", the apex industry body stated in its recently-concluded paper tiled 'Strategy for Developing the New Andhra Pradesh State'.

As of March 31, 2014, Assocham said, AP had attracted total outstanding investments worth about Rs 8.2 lakh crore with power (28%), manufacturing (other than food processing - 18%), infrastructure (17%) and refinery (12%) sectors together comprising over 75% share.

Mining (8%), irrigation (7%), construction and real estate (4%) and information technology and electronics (2%) are other sectors with significant share in investments.

Assocham also suggested the state government to set up an 'AP Entrepreneurship Mission,' based on public-private partnership (PPP) approach. The mission must aim at facilitating 200 business and convenience hubs to provide services and facilities to both rural industries and households.

"Considering that cost of one rural entrepreneurial hub would be in a range of Rs 30-50 crore, it would require financial support worth Rs 6,000-10,000 crore to create requisite ecosystem during the course of next 10 years," added the strategy paper prepared by Assocham Economic Research Bureau (AERB).

Each rural business and convenience hub should consist of an e-governance and agriculture service centre; nursing home, pathological lab and pharmacy; banks and non-banking financial institutions (NBFCs); skill development centre; rural market; proper connectivity and other such facilities.

"Such a vibrant eco-system would ensure an easy access to capital flows comprising both debt and equity to entrepreneurial ventures; venture capital required for further scaling up of businesses; angel investor services to provide mentoring and network access to entrepreneurs and others," Assocham general secretary, DS Rawat, stated in a press release.

As in the case of special category state, Assocham said, 90% cost of creating this ecosystem would be a grant from the Union government and the remaining would be treated as a loan to the state government.

This apart, Assocham has suggested various strategies to be adopted for sector-wise and overall growth and development of AP which includes promoting the cultivation of horticulture, floriculture, medicinal herbs and plants; transforming dairy farmers into entrepreneurs to make value addition to the dairy industry of the state; setting up solar parks and wind turbine generators; revival of inland waterways; providing long-term finance to marginal, small and medium enterprises (MSMEs) and carrying out agriculture reforms.

It has also suggested the new state government to develop a world-class hub airport at Vijayawada and speedy completion of Machilipatnam port. The industry body sought establishment of an inland container depot with all logistics facilities near Hyderabad and linked to Machilipatnam port with a ten-lane road network.

The strategy paper also recommended development of food processing, IT and ITeS, health tourism and education based clusters on both sides of the proposed Vizag-Chennai Industrial Corridor.