Survey stresses need for public sector-led growth

Rs. 8.8 lakh crore worth projects stalled

Updated - November 17, 2021 02:05 am IST

Published - February 28, 2015 01:12 am IST - New Delhi:

Noting that the stalled projects had risen at an alarming rate during the last five years, especially in the private sector, the chief reason for declining investments, the Economic Survey 2014-15 stressed the need for investment-driven growth led by the public sector.

Noting that India’s investment has been “much below potential over the last few years,” the survey said the private sector would find it challenging to drive growth through investments given “highly leveraged corporate balance sheets and a banking system under severe stress.”

“The expectation — that the private sector will drive investment — needs to be moderated,” it said.

Public investments needed to be augmented to recreate an environment to “crowd-in private sector investment.”

As of December 2014, the total worth of stalled projects stood at a massive Rs. 8.8 lakh crore, which was 7 per cent of the GDP. Of these, the public sector accounted for only Rs. 1.8 lakh crore while the rest belonged to the private sector.

Most of these projects (in both sectors) were related to electricity and even among these, most projects under the private sector were actually based on public private partnerships, which affected the public sector directly, the survey noted.

Manufacturing had the most stalled projects in the private sector, while in the public sector, most stalled projects were related to infrastructure.

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