Modi Making Progress in Reducing Stalled India ProjectsBy
Total value of projects before Project Monitoring Group falls
Government doesn't track which projects dropped or completed
Indian Prime Minister Narendra Modi’s government is claiming some success in clearing stalled investment projects.
The total value of stalled projects has fallen $15 billion since May, according to an official in the Project Monitoring Group, a government body established to monitor regulatory clearances. The pace of new projects coming before the group has also slowed, said the official, who asked not to be named due to government rules.
That leaves 279 projects valued at 12.5 trillion rupees ($188 billion) before the committee as of Aug. 28, the official said. Modi has joined monthly conference calls with officials in India’s states to evaluate individual projects, said the person, who participates on the calls.
India’s new e-Nivesh web portal allows investors to apply for some 80 government permits online. Of the 134,870 applications filed digitally so far, about 74 percent have been approved and 1.5 percent are pending past deadline.
There is reason to be skeptical.
The official said the cleared investments are still viable and the slowdown in new projects indicates that investors aren’t getting stuck as much along the way. But the government body doesn’t keep track of which projects were completed or eventually abandoned, and a dearth of new projects could also signal a lack of investor interest.
“We have been hearing about this huge amount of stalled projects getting cleared in the last year, but the fact that we haven’t seen much impact on the ground yet shows that a number of them have become inviable," said Devika Mehndiratta, a senior economist at Australia & New Zealand Banking Group. “The government still needs to kick start public spending on infrastructure.”
Almost three quarters of the stalled projects were substantially completed, unviable or lack funding, UBS Group AG had said in a July 2 note.
India’s economic growth slowed to 7 percent in the three months ended June, down from 7.5 percent the previous quarter. The benchmark S&P BSE Sensex index fell 1.4 percent at 12:22 p.m. in Mumbai, the biggest fall since Aug. 24 when global markets tanked along with Chinese shares.
Modi has struggled to pass key economic proposals through the opposition-controlled upper house of parliament. This week he stepped back from a move to make it easier for companies to acquire land after increased opposition from farmers.
Most of the remaining projects are delayed because of the lack of land approvals for roads, railway and power transmission projects, the person said. Among them is a railway line in Jammu and Kashmir state first proposed in the 1990s that will now cost eight times as much to complete, the person said.
Calls to the mobile phone of Jagdish Thakkar, a public-relations officer for Modi’s office, weren’t immediately answered.
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