Industrial investment planned in '03 may dip

Proposed investments seen 8.6% lower than 2002

Despite "India Shining", proposed industrial investments in India in 2003 is expected to be 8.6 per cent lower at approximately Rs 84,000 crore as against Rs 91,940 crore in 2002, according to government sources.

Data published by the secretariat of industrial assistance (SIA) in the union commerce and industry ministry shows that between January-November 2003, investments worth Rs 77,009 crore were proposed through letters of intent (LoIs) and industrial entrepreneurs memoranda (IEMs).

If annualised, the investments for the whole year stands at around Rs 84,000 crore, a government source pointed out.

LoIs and IEMs are taken as the barometers of investor intention and confidence. Companies proposing an expansion programme apply for LoIs and IEMs under central government rules.

Economists say that the actual investment figures also (investments which have already been made during the year), which includes investments in the services and unorganised sector and by public sector companies, are lower than last year. Also, proposals should not be considered intent as some of these pre-empt plans by competition.

Says BB Bhattarcharya, director, Institute of Economic Growth, "The figures show investors are still not decided on making huge investments. But while there is no doubt that there is a lag effect of an economic boom on the investment cycle, one should remember that long-term investment decisions are not taken based on a few months' performance of the economy. The India Shining noise will have an effect on investments which are looking at short-term gains." He added that there is, however, a positive mood all around.

In fact, the government source pointed out that of the Rs 77,009 crore that was proposed until November, Rs 26,000 crore, or close to a third, was proposed in just two months October (Rs 14,923 crore) and November (Rs 11,004 crore). This could have happened as a fallout of the good monsoon, which created a far better economic outlook.

The source said that during January-November 2003, 97 LoIs were granted with an investment of Rs 1,038 crore, whereas 73 LoIs were issued with proposed investment of Rs 537 crore for the same period in 2002.

Similarly, for the delicensed sector, 3,454 IEMs with proposed investment of Rs 75,971 crore have been filed for the period January to November 2003 as compared to 2,854 IEMs with proposed investment of Rs 85,046 crore during the corresponding period in 2002.

Since the announcement of the New Industrial Policy till the end of November, 2003, 54,636 industrial investment intentions, either for new units or for new articles or for substantial expansion have been recorded by the government.

These intentions involve a proposed investment of Rs 12,21,924 crore and employment for 94,31,256 persons.