India’s growth story alive and kicking, says study

THERE’S some good news for people who thought the Indian growth story will derail a bit following the economic turmoil. A survey project investments in India says the private sector is still willing to commit huge investments in core sectors though short term prospects are clouded. 

The survey by ProjectsToday, an online database tracking projects investment in the country, said fresh projects investment soared over two-fold during April-September 2008 period to touch Rs 5,00,308 crore from a record 7,068 new projects. Compared with investments announced during the same period in 2007- 08, it indicated a growth of 225 per cent. 

The survey said private sector announced a record 3,607 new projects and accounted for nearly twothird of the fresh investment announced during the April–September 2008 period. The government sector, which accounted for 54 per cent of the fresh investment intensions 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 manufacturing sector attracted 1,054 projects entailing an aggregate investment of Rs 1,60,509 crore during H1 of 2008-09. Of the 240 mega projects (with investment of Rs 500 crore or more) announced in the April-September 2008 period, 83 were in the manufacturing sector. The Rs 12,000 crore integrated steel project of Bhushan Steel was the largest manufacturing project announced in the period.

Power sector saw announcement of 217 new projects worth Rs 1,55,299 crore in the first half of 2008-09. Of this, 76 were of mega size with a combined generation capacity of around 50,000 mw. The services and infrastructure sector attracted 5,521 projects worth Rs 1,65,106 crore during H1. In this category, community services, roadways, power distribution, commercial complexes, real estates and SEZs accounted for bulk of the fresh investments. Among states, Andhra Pradesh was the most favourite destination with new investments worth Rs 65,726 crore followed by Jharkhand (Rs 61,579 crore), Madhya Pradesh (Rs 60,742 crore), Maharashtra (Rs 56,878 crore) and Chhattisgarh (Rs 37,708 crore). However, Maharashtra still leads the pack when it comes to total investments including outstanding ones. The survey said total outstanding projects investment in India grew by a whopping 41 per cent over the year ended September 2008, five times the pace a year ago. Manufacturing continued to be the growth driver with outstanding investments shooting up by 54.3 per cent during the period. Electricity and services also saw good increases in envisaged investments. The boom in announcement of new projects coupled with the inordinate delays in implementation of mega projects announced in the past two years brought down the project implementation ratio from 44 per cent in September 2007 to 41.2 per cent in September 2008.

Published in Financial Chronicle, Bangalore Edition (05 November 2008)