Delay in investment implementation costs Punjab Rs 57,000 cr
Updated: May 22, 2014 04:50:31pm
New Delhi, May 22 (KNN) Delay in implementation of investment projects has resulted in serious cost overruns amounting to about Rs 57,000 crore, which is about 47 per cent of the actual cost of over Rs 1.21 lakh crore of investment projects in Punjab, said a study report by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
According to the study titled ‘Impact of delay in investment implementation in the Punjab,’ delay in land acquisition, fund constraints, environmental and other clearances together with law and order problems are the factors that have resulted in overflow of investment projects attracted by the state from various public and private sources thereby further affecting their implementation.
It said there has been a massive fall in growth rate of outstanding investments attracted from various public and private sources across industries and sectors in Punjab from about 78 per cent in 2008-09 to just about four per cent as of 2013-14.
Even the growth of new investments have significantly declined and slipped to a negative average growth rate of over 43 per cent during the course of past three years, said the study by the Assocham Economic Research Bureau (AERB).
New investments in the state had reached over Rs 33,000 crore in 2008-09 and the figure has now fallen to a meagre sum of Rs 4,600 crore.
Commenting on the issue, ASSOCHAM National Secretary General, DS Rawat said 70 per cent investment projects in Punjab remained non-starter as of financial year 2013-14 against about 58 per cent across the country.
“Majority of investment projects that are under implementation (non-starter) in Punjab are in services (39 per cent) and electricity sectors (38 per cent),” he said.
Rawat said several departments of the state government play a crucial role in implementation of investment projects, besides geographical features of the state may also affect the project time and costs.
Sector wise, there has been a shift in investment flow in Punjab as the share of services sector has increased to over 40 per cent as of 2013-14 from about 24 per cent in 2004-05, while the share of construction and real estate sector has increased by 12 per cent during the aforesaid period.
Water related investment projects have seen massive escalation in cost as per cent of actual cost of project to the tune of about 98 per cent followed by airport (82 per cent), railways (70 per cent), construction (68.5 per cent), canals (52 per cent), roads (46 per cent), urban development (44 per cent), manufacturing (38 per cent), power and electricity (32 per cent), processing (23 per cent) and others.
Delay in implementation has also caused depreciation of assets together with necessitating expenses on repairs or replacements.
While the share of manufacturing sector in the overall investments attracted by the state has declined by about 14 per cent, share in electricity sector has declined by about 13 per cent.
Amritsar-Patiala region has emerged on top with over 41 per cent share in total investments followed by Gurudaspur - Rupnagar (20 per cent), Firozpur - Sangrur (20 per cent), while rest of the multiple regions of Punjab account for the remaining 19 per cent of investments.
Punjab’s overall economic growth has decelerated sharply of late as the growth of gross state domestic product (GSDP) from its peak growth rate of over 10 per cent in 2006-07 came down to half i.e. about five per cent in 2012-13 and the advance estimates of economic growth indicate a moderate year-on-year improvement.
Over the years, the state economy has transformed from an agrarian economy to industrial and services based economy as the services sector contributes over 50 per cent to the GSDP at constant price followed by industry (29 per cent) and agriculture and allied activities (21 per cent), added the study. (KNN/ST)
According to the study titled ‘Impact of delay in investment implementation in the Punjab,’ delay in land acquisition, fund constraints, environmental and other clearances together with law and order problems are the factors that have resulted in overflow of investment projects attracted by the state from various public and private sources thereby further affecting their implementation.
It said there has been a massive fall in growth rate of outstanding investments attracted from various public and private sources across industries and sectors in Punjab from about 78 per cent in 2008-09 to just about four per cent as of 2013-14.
Even the growth of new investments have significantly declined and slipped to a negative average growth rate of over 43 per cent during the course of past three years, said the study by the Assocham Economic Research Bureau (AERB).
New investments in the state had reached over Rs 33,000 crore in 2008-09 and the figure has now fallen to a meagre sum of Rs 4,600 crore.
Commenting on the issue, ASSOCHAM National Secretary General, DS Rawat said 70 per cent investment projects in Punjab remained non-starter as of financial year 2013-14 against about 58 per cent across the country.
“Majority of investment projects that are under implementation (non-starter) in Punjab are in services (39 per cent) and electricity sectors (38 per cent),” he said.
Rawat said several departments of the state government play a crucial role in implementation of investment projects, besides geographical features of the state may also affect the project time and costs.
Sector wise, there has been a shift in investment flow in Punjab as the share of services sector has increased to over 40 per cent as of 2013-14 from about 24 per cent in 2004-05, while the share of construction and real estate sector has increased by 12 per cent during the aforesaid period.
Water related investment projects have seen massive escalation in cost as per cent of actual cost of project to the tune of about 98 per cent followed by airport (82 per cent), railways (70 per cent), construction (68.5 per cent), canals (52 per cent), roads (46 per cent), urban development (44 per cent), manufacturing (38 per cent), power and electricity (32 per cent), processing (23 per cent) and others.
Delay in implementation has also caused depreciation of assets together with necessitating expenses on repairs or replacements.
While the share of manufacturing sector in the overall investments attracted by the state has declined by about 14 per cent, share in electricity sector has declined by about 13 per cent.
Amritsar-Patiala region has emerged on top with over 41 per cent share in total investments followed by Gurudaspur - Rupnagar (20 per cent), Firozpur - Sangrur (20 per cent), while rest of the multiple regions of Punjab account for the remaining 19 per cent of investments.
Punjab’s overall economic growth has decelerated sharply of late as the growth of gross state domestic product (GSDP) from its peak growth rate of over 10 per cent in 2006-07 came down to half i.e. about five per cent in 2012-13 and the advance estimates of economic growth indicate a moderate year-on-year improvement.
Over the years, the state economy has transformed from an agrarian economy to industrial and services based economy as the services sector contributes over 50 per cent to the GSDP at constant price followed by industry (29 per cent) and agriculture and allied activities (21 per cent), added the study. (KNN/ST)
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