Stalled projects still remain stuck

Mumbai: Hopes riding on stalled projects being restarted and employment generated received a setback as 390 projects with a cumulative investment of over Rs 19 lakh crore are still facing hurdles.

The Project Monitoring Group (PMG), which was set up in January 2013 in the Cabinet Secretariat to revive projects both in the public and private sector, had accepted 743 projects with an estimated cumulative investment of Rs 31 lakh crore till February 2016 (681 projects worth Rs 28.4 lakh crore till Sep-2015).  

The recovery in the construction sector is likely to get delayed further with the sharp fall in the prices of commodities, which will in turn, defer the private sector investments in segments such as oil and gas, steel, and mining, according to ICRA.

Calling this is a cause for concern, Mr Rohit Inamdar, senior vice-president said, “The growing number of stalled projects in the last two quarters, were  already high at eight per cent of GDP. While many projects were stuck for want of land or clearances, with the ch-anging macro-economic scenario and weak commodity prices, viability and promoters’ interest to continue with the projects have also declined.”

Funding issues have also remained pertinent for the infrastructure sector which comprises the largest share of stressed advances for public sector banks, the primary lenders for infra projects.

This is reflected in the  lag in the execution though the order book position of most construction companies has remained sizeable at three times the revenues.
For companies with better balance sheet, execution has witnessed improvement in FY2015 and the nine months of 2016 with their ability to mobilise higher resources.