Investment drought ending: NCAER

Referring to the Rs 42,340 crore new investment plans of automobiles and ancillaries, metals, chemicals, electronics, paper and pharmaceutical sectors, National Council of Applied Economic Research (NCAER) has said it can end the "investment famine" and increase production capacities.

Expressing concern over the sustainability of the present industrial upturn because of the absence of a turnaround in investment demand, the Delhi-based economic thinktank pointed out to the new planned investment in manufacturing by companies like Indian Oil Corporation, which has envisaged Rs 25,000 crore, followed by BSES and Nalco with Rs 3,000 crore each.

The other planned manufacturing investments include Tata Steel (Rs 1,700 crore), Tata Chemicals and LG Electronics (Rs 1,200 crore each), Hyundai (Rs 1,100 crore), Balco and Indo Rama (Rs 1,000 crore each), Ispat (Rs 890 crore), Jindal Polyester and Jindal Stainless (Rs 600 crore each), JSPL (Rs 550 crore) and Finolex Industries, Shaw Wallace and Moser Baer (Rs 500 crore each), the NCAER noted.

In its quarterly review, NCAER said, "This perhaps could well end the investment famine, witnessed since the mid-nineties," and added that a major concern over the sustainability of the present industrial upturn had been the absence of a turnaround in investment demand.

Most of the capacity addition was going to be spread over 2 to 3 years, it said, referring to the investment plans.

NCAER said heavy industries like oil, cement, steel and aluminium were already operating at a capacity of 86 per cent or above.

It said there were no worries over short-run industrial growth figures but added "anxiety" was there on the fiscal front.

"The recent policy announcements to boost industrial growth have been welcomed, but they have also raised concerns about the fiscal deficit. They (announcements) may cost the exchequer Rs 12,200 crore," the economic thinktank said.

Pointing out that nearly 600 companies were planning to raise over Rs 50,000 crore from the primary markets, it said with the revival of the primary capital market and indication of investment demand picking up, "the prospect for a durable industrial upturn is very good".

NCAER, however, said the sustained bull run in the secondary market had not fuelled the primary market during 2003, with only 15 public issues hitting the market, raising Rs 2,194 crore.