CMIE study shows implementation has gathered pace and turnaround by next year is possible. This will create more jobs, push overall economic growth.
New Delhi: Only projects worth Rs 11 trillion are likely to be completed in 2018-19, instead of the earlier estimate of Rs 14 trillion, a study shows.
The study by the Centre for Monitoring Indian Economy (CMIE), an independent think tank, also says that in the second quarter, projects worth around Rs 1.3 trillion are to be completed, much lower than the scheduled completion of Rs 2 trillion during the quarter.
However, what could come as a big relief for the Modi government, the study has shown that implementation of projects has gathered pace with the economy picking up.
A speedy implementation will help in completion of several stalled projects, which is expected to create more jobs, push overall economic growth and help in recovery of non-performing assets (NPA).
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Project completion, which began slowing down in 2017-18, continued even in the current financial year. But now with the pace of implementation picking up, there could be a turnaround in completion of the projects by the next financial year, the study says.
“Completion of projects had slowed down sharply during 2017-18. The slowdown has continued into the first half of 2018-19,” Mahesh Vyas, managing director of CMIE said in his paper.
“But if the implementation rate picks further pace, then we could see a turnaround in completions in 2019-20,” he added.
Vyas also said that the estimate of aggregate completions during a quarter will undergo substantial revisions in the months following the end of the quarter. The estimate of project completion during the April-June quarter of 2018, which was earlier at Rs 779 billion, has been now revised to Rs 1.16 trillion.
“We expect this to rise a little more to stabilise at about Rs 1.35 trillion,” the report said. However this is marginally lower than the expected completion of Rs 1.5 trillion during the quarter.
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One of the main projects completed during July-September quarter of the current financial year is the Rs 50 billion consumer goods factory by Samsung India Electronics. The project proposes to produce 52 million mobile phones, 1.5 million refrigerators and 1.3 million flat televisions. The project was announced in October 2016.
The Pakyong airport in Sikkim, developed at a cost of Rs 6 billion, was also inaugurated in this quarter. This involved a cost overrun of Rs 4.5 billion and a time overrun of 81 months, the report shows.