The latest data released by CMIE shows that the value of stalled projects have risen from INR 9.66 trillion in 2015 to INR 13.22 trillion in September 2017.CMIE’s capex database is used as a leading indicator for tracking the health of India’s economy which, in turn, acts as an incentive for capacity expansion by new firms. This precipitous rise in the value of stalled projects, however, cannot be completely attributed to the current government. Itis largely a legacy issue which started from the year 2009. The average quarterly stalling of projects which hovered around INR 143 billion from 2000-2008rose steeply after 2007-08.Itrose to INR 586 billion in 2008-09 andINR 573 billion in 2009-10, beforeslipping to INR 402 billion in 2010- 11. Post 2009-10, the quantum of projects stalled was much higher. The quarterly average rose sharply to INR 1.2 trillion in 2011-12, INR 1.1 trillion in 2012-13 to peak at INR 1.6 trillion in 2013-14. In total, according to the CMIE data (2014), the total value of stalled projects rose to INR 6.26 trillion during 2013-14.
Many of the past investmentdecisions that were taken during the period of fiscal profligacy followed in 2012-13 started getting shelved and have, on the whole, created the issue of stalled projects in India. This, however, does not mean that the current government has no responsibility of solving this grave issue. Though the current government has taken some noteworthy steps to address the issue, they still have not been able to fully arrest the rising levels of stalled projects.Right after the regime changed in 2014, the Project Monitoring Group (PMG) which was setup in 2013 and functioning under the Cabinet Secretariat, was brought under the direct purview of the Prime Minister’s Office (PMO). The PMG is an institutional mechanism for resolving issues that affect the progress of large scale projects in India. From then till 1st January 2018, the PMG has helped in the commissioning of 274 projects in India. Additionally, with regard to land acquisition, the government tried to make some changes to the 2013 Land Acquisition Act which created an unbearable amount of procedural strain on entities that tried to acquire land for setting up new projects. Incidentally, the passing of the Land Acquisition Act, 2013 assisted in rising the value of stalled project by over 45 per cent from the period 2012-13 to 2013-14. Though the efforts taken by the current government to reduce the regulatory burden due to the Land Acquisition Act, 2013have failed because of political constraints, the fact that the current government tried to address land acquisition, which probably is the biggest impediment for setting up any manufacturing plants in India shows that the government is serious about its commitment to make India a favourable investment decision for manufacturers.