Implementation delay push investment projects' cost by 47 pc in Punjab
Land acquisition delays, fund constraints, delay in environmental and other clearances together with law and order problems are the key factors that have resulted in cost overruns to the tune of about Rs 57,000 crore or 47 per cent of the actual cost of over Rs 1.21 lakh crore of investment projects attracted by Punjab, according to a study.
"Resultantly, 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," noted a state specific study titled 'Impact of delay in investment implementation in Punjab,' conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Sector-wise, 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), and processing (23 per cent).
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, further noted the study prepared by the ASSOCHAM Economic Research Bureau (AERB).
"New investments in Punjab had reached their peak of over Rs 33,000 crore in 2008-09 and the figure has now fallen to a meagre sum of Rs 4,600 crore," the chamber said.
"Punjab also paints a grim picture in terms of implementation of investment projects as about 70 per cent of projects remained non-starter as of 2013-14 as against about 58 per cent across India," said Mr D S Rawat, national secretary general of ASSOCHAM while releasing the chamber's study.
"Majority of investment projects that are under implementation (non-starter) in Punjab are in services (39 per cent) and electricity sectors (38 per cent)," said Mr Rawat.
"Several departments of the state government play a crucial role in implementation of investment projects as land acquisition, shifting of utilities and others are taken at the state government's level, besides geographical features of the state may also affect the project time and costs," he said.
While the initial cost estimates are arrived at using the current input prices, with delays in implementation the input costs swell thereby increasing the projects' cost, besides it also causes depreciation of assets together with necessitating expenses on repairs or replacements, he said.
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, the chamber said. More UNI MP VP1417 NNNN
While the share of manufacturing sector in the overall investments attracted by Punjab has declined by about 14 per cent, while that in electricity sector has declined by about 13 per cent, highlighted the study.
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 it 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, the chamber said.
Over the years, Punjab's 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), noted the study.
(Posted on 21-05-2014)