Economic Survey 2015: Investment flows hinge on revival of top 100 stalled projects

Stalled projects worth Rs 8.8 lakh crore, or 7 per cent of GDP, are holding up investments in the economy, impacting corporate balance sheets and public sector banks which have extended loans.

Chief economic advisor Arvind Subramanian, a votary of increased public investment to push growth, suggested that dealing with the top 100 stalled projects can address over 80 per cent of the problem. In addition, the Economic Survey has suggested that reworking the public-private partnership architecture could help declog the system.

"Combining the situation of Indian public sector banks and corporate balance sheets suggests that the expectation that private sector will drive investment needs to be moderated. In this light, public investment may need to step in to recreate an environment to crowd-in private sector investment in the short term," the document, authored by a team led by Subramanian, said.

Although it noted a sharp rise over the years in held-up projects, the Survey said the numbers had plateaued in the last three quarters, indicating that fewer were being added to the list. And while the emphasis is on infrastructure, the study by the finance ministry showed it was manufacturing that accounted for the bulk of stalled projects, especially in the private sector.

Similarly, contrary to popular belief, the Survey said unfavourable market conditions, and not regulatory clearances, are stalling a large number of projects in the private sector. In the public sector, however, regulatory hurdles were the main reason for delays.

Manufacturing sector was stifled by a general deterioration in the macroeconomic environment, while electricity projects were a victim of non-availability of coal.

Out of the Rs 8.8 lakh crore worth stalled projects, public and private sector accounted for Rs 1.8 lakh crore and Rs 7 lakh crore respectively.