Notwithstanding the global economic gloom, a record 7,068 new projects worth over Rs. 5 lakh crore were announced in the first six months of financial year 2008-09, an increase of a staggering 225 per cent as compared to investments announced in the same period last year.
This was revealed in a study "Project Investments in India" for the six-month period from April to September 2008 carried out by ProjectsToday, India's leading online database on projects investment in India. The study, conducted in the first week of October 2008, covered 27,143 projects entailing a total investment of Rs. 37,68,506 crore (approx. $875 billion).
Of the 7,068 new projects, 240 were of mega size, each with an outlay of over Rs. 500 crore.
The feat also indicated nearly hundred percent rise over fresh projects investment in the first half of 2006-07, the earlier prominent year in which the country had enjoyed buoyant investment. Manufacturing, electricity and services sectors shared the booty almost equally, reveals the study.
Shashikant Hegde, CEO, ProjectsToday said, "Though in the next six months, the overall projects implementation pace would remain subdued, the recent measures like 60 per cent hike in the annual limit on external commercial borrowings by Indian companies and injection of around Rs. 1,00,000 crore of additional liquidity into the system through reductions in CRR will go a long way in boosting the morale of Indian project promoters. The long term outlook for projects investment looks pretty good."
The first six months witnessed completion of 620 projects and stalling of 192 projects while total outstanding projects investment increased by 41 per cent. The project Implementation ratio dipped from 44.0 per cent in September 2007 to 41.2 per cent in September 2008.
Contrary to the general fear of a slowdown in announcement of investment intentions, private sector announced a record 3,607 new projects and accounted for nearly two-third of the fresh investment announced during the April - September 2008 period.
The Government sector, which accounted for 54 per cent of the fresh investment intentions in the first half of 2007-08, saw its share in total fresh investment dwindle to 35.6 per cent during the six months period ended September 2008.
The developments particularly in physical infrastructures of the country seem to be overriding negative factors like global financial turmoil, rising financing costs and several local irritants, the study said. Maharashtra retained its premier position, while Andhra Pradesh dislodged Orissa from the second positionm, it said.
Though the current vigour shown by Indian companies in announcing new projects augurs well for the overall growth in projects investment, ProjectsToday maintained that what is more important is faster implementation of these intentions.
In this context, the recent decline in project implementation ratio is really a cause for concern. There are many reasons to believe that the project implementation pace will continue to be subdued in the second half of the fiscal 2008-09.
