New project investments drop 23% in 2009-10

Investment in new projects in the country dropped 23 per cent to Rs 6,56,629 crore in fiscal 2009-10 impacted by the economic downturn and drying up of foreign funds, but is likely to improve this fiscal.

A survey by online database on projects investment Projects Today, said investment activities are still in the recovery mode and would take some more time to gather momentum.

A total of 9,086 new projects entailing an investment of Rs 6,56,629 crore were announced in 2009-10 compared to 12,533 new projects worth Rs 8,62,634 crore in 2008-09.

This indicates a decline of 27.5 per cent in the number of start-ups and 23.9 per cent in terms of investments for ongoing projects.
    
However, the annual drop in project start-ups in 2009-10 was confined to the first half that recorded a steep decline in project announcements.
    
"We would like to state that though project investment has made some headway in the fiscal 2009-10, it has not yet reached levels that would inspire confidence in its pace in the coming years," Projects Today CEO Shashikant Hegde said.
    
The survey said the private sector came out with big ticket projects, reflecting the confidence of the private promoters in the country's growth story.
    
The share of the private sector in total fresh investment remained 64 per cent in 2009-10. The private sector came out with fresh investments worth Rs 420,144 crore through 3,322 projects.
    
"In the case of private sector, the global economic slowdown, drying up of cheaper foreign funds and slow progress made by the already announced projects made private promoters to adopt 'wait and watch' policy," the report stated.
    
In 2009-10, the government announced 5,764 fresh projects valued at Rs 2,36,485 crore.
    
"It was the general election followed by the state elections in major states like Maharashtra, Andhra Pradesh, Haryana and Jharkhand, which hindered the process of finalisation of new projects in the public sector," it added.
    
Moreover, 1,381 projects with total investment of Rs 1,24,419 crore were completed/commissioned in fiscal 2009-10.
    
"Mere announcement of projects will not help the nation in moving back to high growth era. Announcements should turn into actual capacities in quickest possible time," Hegde said.

However, there is optimism about project investments picking up in 2010-11, with the government placing greater emphasis on infrastructure building and the economy showing signs of revival in the second half of FY 2010-11.