The 78th Survey of Projects Investment in India indicates increase in number of shelved projects in FY20. As against 584 projects shelved in FY19, 680 projects were put on the back burner in FY20. However, in terms of projex (projects expenditure) the increase was minimal at 0.8 percent.
In FY19, the total projex put on hold had decreased by 21.0 percent on a Y-o-Y basis. The declining trend was expected to continue in FY20. However, the economic slowdown and increased difficulties faced by promoters in financing their projects saw stalling of similar quantum of projex in FY20. As against 584 projects worth Rs 4,55,077 crore put on hold in FY19, 680 projects worth Rs 4,58,815 crore were put on the back burner by project promoters in FY20. Delay in clearance, funds constraint, delay in payment by government agencies and non-availability of land remained the major reasons for halting the projects.
Projex Stalled by Ownership
The ownership pattern of stalled projects in FY20 too reflected the same pattern observed in FY19. While around 70 percent of the total projex stalled was owned by the private sector, the balance 30 percent was owned by government agencies.
However, the sectoral spread of the stalled projex indicated sharp increase in stalling of infrastructure projects. As against 216 infrastructure projects worth Rs 54,237 crore stalled in FY19, 289 projects entailing a total investment of Rs 1,33,553 crore were abandoned by project owners in FY20. Within this sector, Railways, Roadways and Ports together accounted for 71.1 percent of the shelved projex. While the Railways saw 39 projects with a total investment outlay of Rs 39,150 crore being stalled, 37 projects worth Rs 12,456 crore were shelved in Roadways and 34 projects worth Rs 43,045 crore were abandoned in the Ports sector.
The private sector dominated by Manufacturing sector saw shelving of 260 projects worth Rs 1,37,715.3 crore in FY20. When compared with FY19 shelved figures this indicated an increase of seven percent. The Fertilisers, Cement, Steel and Paper sectors saw sizeable vanishing of projex in FY20.
The Power sector, which had seen an average of Rs 2,57,000 crore worth shelving of projex in the preceding four fiscals, saw a healthy fall of 31.8 percent in total shelved projex amount. As against 126 power projects worth Rs 2,69,586 crore stalled in FY19, 101 projects worth Rs 1,83,877 crore were put on the back burner in FY20. Thermal, Hydel and Non-conventional power segments saw vanishing of sizeable projex.
Of the 101 shelved projects, the Rs 21,820 crore hydel-based power project of Etalin Hydro Electric Power was the largest. The project was proposed in 2007 but could not make much progress and was stalled as the site was considered one of the most biodiversity-rich places in the world. The second largest shelved project was the Rs 20,000 crore, 2,000 MW gas-based combined cycle power project of Nana Layja Power Company due to financial constraints. The company has been referred to NCLT.
The quantum of vanishing projex in the Mining and Irrigation sectors was far less when compared with the other major sectors. In the Mining sector 24 projects worth Rs 1,612 crore and in the Irrigation sector six projects worth Rs 2,057 crore were stalled.
Projex Stalled by States
The top five states accounted for around 53 percent of the projex vanished for various reasons in FY20. Andhra Pradesh topped the list with 79 projects worth Rs 70,848.7 crore. The state lost 15 mega projects worth Rs 60,859 crore. Among the shelved projects, two fertiliser projects each costing Rs 10,000 crore of the Indian Farmers Fertiliser Co-operative and VBC Fertilizers & Chemicals were the notable ones.
Gujarat also saw shelving of 79 projects with a total projex of Rs 59,450.9 crore. The Rs 20,000 crore gas-based power project of Nana Layja Power Company and the Rs 10,000 crore fertiliser project of the Gujarat State Fertilizers & Chemicals were the two large projects shelved in the state.
Of the remaining three, Arunachal Pradesh lost nine projects (Rs 39,156 crore), Chhattisgarh lost 23 projects (Rs 37,716.5 crore) and Maharashtra lost 95 projects (Rs 34,452.6 crore).