ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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CPI(M)-Note of Dissent

above prognoses. Projections of corporate investment by the Reserve Bank of India on the basis of costs of projects sanctioned by the term-financing institutions suggest that the rate of growth of total capital expenditure in real terms has declined from 18.5 per cent in 1992-93 to 14,5 per cent in 1993-94 and further to 10 per cent in 1994-95. Similarly. a CMIE survey of 3,000 industrial investment projects on hand involving a total investment of Rs 7,76,444 crore shows a sharp rise in fresh investment intentions (45.7 per cent) but very slow growth in projects actually being implemented (4.4 per cent). The RBI study shows concentration of new project proposals in chemicals and petrochemicals (32.7 per cent) and metals and metal products (18.4 per cent). CMIE data show that power plants accounted for about 75 per cent of the increase in investment proposals between the end of 1993 and 1994. The CMIE survey has also brought out that a large number of projects have been stalled for one reason or the other, if they have not been abandoned outright. A frequent reason cited is the new competition that industry is facing from imports. This is particularly true of chemicals and petrochemicals, where reduction of customs duties has rendered projects unviable. A few steel projects have similarly been put on the shelf after the recent reduction in import duty on sponge iron and finished steel. Investment in the power sector has suffered for three major reasons: virtual stoppage of new investment by central government enterprises such as NTPC and NHPC, transfer of several projects earlier proposed by SEBs to the private sector with consequent delays and cost overruns and entanglement of the new power policy in controversies over high capital costs and non-transparent agreements for power purchase by SEBs based on assured returns and guarantees and counter- guarantees offered by the government to foreign investors.

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