There’s less red tape than we think

it may be come as a surprise for most, but a study conducted by the centre for monitoring the indian economy has given a clean chit to the government on its clearance procedures. the cmie findings highlight the investors's viewpoint that government clearances are not a problem for most investment projects in india, including foreign direct investment. the findings are based on a survey conducted by the cmie for the ministry of industry and policy planning. the findings of the survey, titled problems and progress in implementation of major investment projects in india, were presented to commerce and industry minister murasoli maran on tuesday. covering 304 projects amounting to rs 3,51,023 crore, in terms of value, 47% of total investment in all projects in india, but excluding power, telecommunications and irrigation projects, the survey takes the wind out of detractors who hold government clearances to be the single most important stumbling block to investments. instead, it points out that poor demand is primarily responsible for delays in implementation of projects in india. the survey, which covered the period may to october 2001 highlights the fact that 57 per cent of the respondents surveyed did not find government clearances to be a problem, while 19 consider government clearances to be a problem. indian private sector companies find getting government clearance a somewhat bigger hurdle than foreign companies. also, getting clearance from local government was found more of a problem than state and central government clearances. about 31 per cent of the respondents considered funding to be a problem. funding problems are more acute for the private sector, with loans being an issue for nearly 52 per cent of the private sector projects. availability of funds rather than the cost of funds was an issue. the decline in the plr by nearly 4 per cent in the last 5 years appears to have eased the cost of fund constrains considerably for promoters. only 11 per cent of the respondents considered infrastructure to be a problem. the percentage is slightly higher at 19 per cent for power and 15.5 per cent with respect to land availability for indian private sector projects. on an average, fdi projects considered the level of infrastructure available, much less of a constraint as compared to government and indian private sector projects. further, while 27 per cent of the projects consider domestic demand to be a problem, 16 per cent of the projects considered this to be a serious problem. overall, 28 per cent of the companies covered in the survey said they were postponing their initial investment decisions or their expansion plans because of their adverse perception with regard to domestic demand, overseas demand and also competition arising out of imports. projects pre-dominantly funded through fdi show patterns which are similar to the ones seen in other projects. the department of ipp, ministry of commerce & industry, had commissioned cmie in april 2001 to identify the underlying causes for slow implementation of major investment projects in the country. in all 490 projects (440 projects involving investment more than rs. 50 crore and 50 projects with investment less than rs. 50 crore each) were taken up. these projects were located in 25 districts (top ranking in terms of total investment) of tamil nadu, maharashtra, gujarat, karnataka, andhra pradesh, west bengal, up, kerala and orissa.

There’s less red tape than we think

IT MAY be come as a surprise for most, but a study conducted by the Centre for Monitoring the Indian Economy has given a clean chit to the government on its clearance procedures. The CMIE findings highlight the investors’s viewpoint that governmen...

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