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Signs of revival in project investment scenario

Our Bureau

NEW DELHI, July 21

EVEN as the monsoon continues to play truant in major parts of the country, there is still some good news for industrialists and policy-makers. The domestic project investment scenario is showing discernible signs of revival. And this can be gauged from the fact that both aggregate investment as well as the project implementation ratio has improved during the first quarter of the current fiscal.

According to the quarterly survey of project investments, the seventh in the series carried out in June 2002 by Projects Today, a division of Economic Research India Ltd, based in Mumbai, outstanding investments as on June 30 showed a 3.4 per cent increase over the previous quarter ended March 31, 2002.

Similarly, the project implementation ratio has also improved to 39.4 per cent in June this year from 37.3 per cent in March. What is more significant, the rise is spread across all major sectors which leads one to believe that the revival is widespread.

Coming to specifics, the survey reveals that as of June 30, there were 6,882 live projects under various stages of implementation in the country. The total investment involved in these projects was about Rs 17,67,739 crore. On a quarter-on-quarter basis, it works out to an increase of 3.4 per cent during the quarter ended June. This, according to the survey, compares well with the 1.5 per cent rise recorded during the January-March survey period.

This apart, fresh investment worth about Rs 45,300 crore were announced during the April-June quarter this year, the major sectors of attraction being metallurgy (iron & steel and aluminium), real estates and software parks.

As for the project implementation ratio, there was an increase of about two percentage points during the April-June quarter this fiscal with the total investment under execution at around 39 per cent as against 37.3 per cent in the previous quarter ended March 2002.

Interestingly, the data also reveals that the country does not appear to be on the priority list of foreign project promoters any more. The decline in outstanding project investments by foreign promoters, a trend witnessed over the last six quarters, continued. The decline in the seventh quarter was six per cent, the highest ever registered so far.

Not surprising then, that the Government agencies, both Central and State, dominated in project investments. The survey confirms beyond doubt that as of June 30, the public sector agencies accounted for 60 per cent of the total investment planned in the country. Outstanding project investments in the public sector rose by 5.75 per cent in the April-June 2002 quarter, which is over and above the 4.7 per cent growth witnessed in the preceding quarter.

As for the sectoral classification of investments, the manufacturing and mining sectors recorded positive growth rates of 3.4 per cent and 2.3 per cent, respectively and thus reversed the trend of negative growth seen in the previous quarters. While investment in the services and utilities sector maintained a decent pace of growth at 4.4 per cent during the April-June quarter which was on top of a 3.6 per cent growth in the previous quarter, investment in the power sector remained staid with a nominal growth of 1.2 per cent.

In particular, the services sector that saw a growth of 27 per cent in fiscal 2002-02, continued to engage the investors' attention with a quarter-on-quarter rise of 4.4 per cent in total investment during June. Accounting for about 40 per cent of the total investment planned in the country, real estates and industrial/software parks, within this sector, received a good number of fresh proposals.

In terms of investment lured by states, although Maharashtra continued to be the front-runner in terms of total investment and project implementation ratio, outstanding projects investment in the State increased by a mere 0.4 per cent. In Gujarat which ranked second, outstanding projects investment declined by 3.1 per cent during the April-June quarter this year. Andhra Pradesh, with a total investment of Rs 1,53,192 crore, relegated Karnataka to the fourth position.

Outstanding projects investment in Karnataka rose by 4.1 per cent as compared to the national average of 3.4 per cent.

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