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Mr. Shashikant Hegde, CEO, Projects Today
Mr. Shashikant Hegde, CEO, Projects Today

With the announcement of General Elections, the country has entered the election mode. A new government will take office in the first week of June 2019. On the back of this development, Projects Today decided to do a five-year trend analysis of projects investment in the country.

The current NDA government is credited with introduction of some path-breaking reforms like enacting the Insolvency and Bankruptcy Code in December 2016, launching of Ayushman Bharat, a health insurance scheme to take care of the poor, undertaking mass scale rural electrification, executing the Swachh Bharat mission, putting extra emphasis on infrastructure building and solar power projects. On the economic front, the government was lauded for keeping inflation at lower level, maintaining fiscal discipline and improving the Ease of Doing Business rankings from 134 in 2014 to 77 in 2019. At the same time, the government’s two disruptive economic measures, Demonetisation and GST were cited as the principal contributors to the sharp fall in projects investment and new jobs creation in recent years.

Projects Today’s 74th Survey of Projects Investment in India has made an attempt to find out the cumulative effect of the above developments on projects investment during the five-year period FY15-19 and do a comparative analysis of such investment in the preceding five-year period FY10-14. The Survey also looks into the trends in project commissioning and stalled during the same periods.

Fresh Investment: Five-Year period saw both dip and growth

As per the Survey, during the five-year period FY15-19, 47,911 new projects were announced with a total investment of Rs 60,51,281 crore as against 43,876 new projects worth Rs 29,28,125 crore announced in the preceding five-year period FY10-14. This means, aggregate fresh projects investment increased by 106.7 percent during the two lustrums.

The buoyancy in the announcement of fresh investment was observed across all major sectors except Electricity, which saw absolute decline in a number of new projects and investment committed therein. While fresh investment increased by more than 100 percent in the Manufacturing, Mining, Infrastructure and Irrigation sectors, the Manufacturing and Irrigation sectors saw less number of new projects announced during the latest five-year period ending 31 March 2019.

Fresh InvestmentManufacturing: Rise in Mega Projects

Though the Manufacturing sector attracted 1,325 less projects during the FY15-19 period, thanks to increase in the number of mega projects (with cost of Rs 1,000 crore or more), total fresh investment swelled up by 130.5 percent from Rs 7,00,725 crore to Rs 16,15,456 crore. As a result, the share of Manufacturing in the total fresh investment increased from 23.9 percent in FY10-14 to 26.7 percent in FY15-19.

Among the sub-sectors, Fertilisers, Steel, Cement, Refinery and Electronics segments received increased fresh projects commitments during the FY15-19 period.

The FY15-19 period saw announcement of 253 mega projects. Of these, 218 were owned by private promoters. The preceding five-year period had seen announcement of 131 mega projects. While private-sponsored mega investment proposals were found in the Steel, Cement, Aluminium, Electronics, Automobiles sectors, the Government mega proposals were limited to the Steel, Petroleum and Fertiliser sectors.

Infrastructure: Pump-priming by Government

Reflecting the emphasis of the NDA government on infrastructure building, fresh investment announcement multiplied three times from Rs 11,46,208 crore to Rs 34,09,300 crore during FY15-19. The sector comprising transport and social infrastructure saw announcement of 39,509 new projects in FY15-19 as against 33,145 projects announced during the FY10-14 period.

The sharp increase in new investment pushed the share of the Infrastructure sector in total fresh investment to 56.34 percent from 39.14 percent recorded in FY10-14. The bulk of the investment in this sector was proposed by the Central and state government agencies.

The extra emphasis laid by the Central government on faster execution of highway projects saw fresh investment commitment nearly trebling from Rs 3,64,809 crore in FY10-14 to Rs 11,24,996 crore in FY15-19. The round-the-clock monitoring of highway projects led to a sharp increase in the pace of project execution. As a result, the per day highways building record increased from 12 km in 2013-14 to 27 km in 2018-19.

The Construction sector comprising Commercial Complexes, Industrial Parks and Real Estate saw a fall in a number of new projects during the five-year period FY15-19. Though fresh investment commitments increased by nearly three times from Rs 2,18,439 crore in FY10-14 to Rs 6,42,657 crore in FY15-19, the twin-balance sheet phenomenon affected this sector the most. Further, demonetisation and introduction of the RERA Act disrupted basic functioning of the industry.

Power Sector: Marred by fuel and finance

The Power sector, during the FY15-19 period, witnessed more stalling of the existing projects than announcement of new projects. Most of the large-sized thermal power projects announced during the FY10-14 period could not make much progress due to non-availability of land, lack of finance and delays in signing of PPA agreements. Additionally, the inordinate delays in payment of dues by state discoms forced private developers to put on hold their new and expansion plans.

As against 639 thermal projects worth Rs 7,90,227 crore announced during FY10-14 only 98 new thermal projects worth Rs 2,19,568 crore were announced during FY15-19. To make the matter worse, 220 projects worth Rs 7,08,823 crore were stalled during this period. On the other hand, new investment in renewable power projects (mainly Solar and Wind) expanded by 294.5 percent from Rs 92,760 crore in FY10-14 period to Rs 3,65,953 crore during FY15-19.

Irrigation: Heavy investment by a couple of states

The Irrigation sector saw an increase in fresh investment by 243.27 percent. Cumulative fresh investment in this sector increased sharply from Rs 57,934 crore in FY10-14 to Rs 1,98,869 crore during FY15-19. Madhya Pradesh, Rajasthan and Telangana were the large investors in this sector. Together, the three states accounted for around two-third of the total fresh investment seen in this sector in FY15-19.

Mining: Affected by Judicial Intervention

The Supreme Court’s decision to cancel allocation of 214 coal blocks not only stalled fresh investment flowing into this sector, but also affected the functioning of power plants with an aggregate capacity of 28,000 MW.

Though the Central government has re-allocated or auctioned 86 out of the 214 coal mines declared illegal by the Supreme Court, actual production has begun in only 23 mines as of December 2018. The situation is not better in metal ore mining either. Hence, a bulk of the fresh investment in the Mining sector continues to driven be by the public sector companies.

The FY15-19 period saw announcement of 763 new projects worth Rs 1,88,272 crore as against 627 projects worth Rs 89,711 crore announced during FY10-14. The Private sector is involved in around 60 oil exploration projects and 25 coal mining projects.

Private Sector Investment on the wane?

Private investment after picking up impressively in FY15 and FY16 slumped in FY17 and FY18 only to recover in FY19 (see Chart). However, all along the five years fresh private investment remained higher than the lower figures seen in FY12, FY13 and FY14.

The large-scale stalling of projects in the last three years of UPA-II was due to policy paralysis and diversion of funds from private project promoters. Heavy borrowings and mismanagement of funds forced owners of such projects to default on their debts mostly borrowed from Indian banks. This in turn swelled the banks’ NPA levels and led to a financial situation termed as “twin-balance sheet problem”. The twin-balance sheet effect weighed heavily on financing the ongoing projects, which in turn forced even the genuine promoters to go slow on new projects announcement.

To attain sustainability in private fresh investment, along with increase in projects investment, the number of new projects should also increase. Though in FY15-19, total fresh investment by the Private sector increased by 55 percent (thanks to mega projects), the number of new projects fell sharply when compared to FY10-14 statistics. This indicates the uneasiness of small- and medium-size private companies that are still awaiting revival in domestic demand to chalk out their expansion plans.

Fresh pvt investmentFurther, in recent years companies have realised that acquisition of stressed assets referred to NCLT is an easier route for expanding capacities than building new ones. This coupled with the Demonetisation and introduction of GST led to a fall in fresh investment during FY17 & FY18. However, the announcement of a couple of mega projects saw investment bouncing back to a record level in recent years in FY19. The year saw announcement of 2,971 private projects worth Rs 6,77,510 crore.

The slowdown during FY17 & FY18 pulled down the overall growth rate of private investment to 55.6 percent during FY15-19, while the overall fresh investment grew at 106.7 percent during the same period.

Government peddling the projex cycle

While policy paralysis affected announcement of the Central government-sponsored projects severely during the last couple of years of UPA-II, the subsequent five years (FY15-19) saw the Central government committing more funds towards infrastructure projects. During FY15-19, 8,085 new projects worth Rs 19,96,162 crore were announced by the Central government-owned agencies. Most of the new investments were seen in the Railways, Roadways and Urban Infrastructure projects.

Similar buoyancy was seen at the state level too. During the FY15-19 period, 27,745 new projects worth Rs 17,18,275 crore were announced by state-owned agencies. The preceding five years had seen announcement of 22,697 new projects worth Rs 7,68,926 crore. At state level, fresh investments were seen in the Roadways, Community Services, Water Supply Schemes and Irrigation sectors.

Top three states maintain their Supremacy

The trends in fresh investment in lustrum FY15-19 as compared with lustrum FY10-14 revealed that among the major states the top three – Maharashtra, Andhra Pradesh and Gujarat — maintained their respective ranks. Karnataka (from 9th position to 4th position), Rajasthan (from 11th to 9th position) and Uttar Pradesh (from 8th position to 6th position) improved their rankings.

Whereas major states like Bihar, Chhattisgarh, Jammu & Kashmir, Jharkhand, Kerala, Madhya Pradesh, Tamil Nadu, Uttarakhand and West Bengal saw a fall in their rankings.

Among the North-Eastern states Assam, Nagaland and Manipur improved their rankings, but Meghalaya, Mizoram, Tripura saw slippages in their rankings.


No doubt the Projects Today Survey reveals a healthy increase in overall fresh investment in the five-year period FY15-19, but the sharp fall in the number of new projects in the Manufacturing and Power sectors and falling project execution ratio suggests that project developers in the Private sector are not yet ready to commit fresh investment on a consistent basis. Delays in clearances at the Central and state levels and issues like availability of land and finance have forced them to hold back their expansion plans. They would rather look for acquisition of stressed assets to expand their capacities than setting up new units.

The creation of new jobs would happen only if increased investment fructifies in the Manufacturing, Infrastructure and Construction sectors. Barring Infrastructure, the Manufacturing and Construction sectors are dominated by private players and they would commit fresh investments only if the investment environment looks comfortable.

The new government, which would assume office in June 2019, should do the following to prop up the project investment activities in India.

  • Extend additional help to the Manufacturing and Construction sectors through policy measures.
  • Further, enhance the pace of project clearances, especially at the state level.
  • Increase the pace of NCLT hearings, so that the distressed assets could find new owners and lenders get their money back.
  • Continue infrastructure building with increased vigour. Involve more and more private developers in Road, Rail, Port and Airport building.
  • Address the issues faced by both thermal and solar power projects at the earliest.
  • Set up a robust farmer support system to avoid the periodical farm-distress the country witnesses.
  • Set up a robust project monitoring mechanism to ensure time-bound execution of critical infrastructure and mega projects in the Manufacturing, Mining and Power sectors.


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