The number of stalled infrastructure projects has declined, but the pace of new capex has declined in the March and June quarters, Mahesh Vyas of Centre For Monitoring Indian Economy told CNBC-TV18.
He said the chances of projects getting stalled had receded, thanks to the policy measures by the new government. At the same time, land acquisition related issues have not been full resolved, Vyas said.
Within stalled projects, many projects are being abandoned as companies no longer find them viable, Vyas said, adding profitability remained a challenge for most companies.
Below is the transcript of Mahesh Vyas' interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: You all must have done your calculations for the April-June quarter. Do you have any good news for us, have the number of stalled projects declined?
A: Yes, that is right. The number of stalled projects has declined and they have been declining steadily in the last two-three quarters so that continues to remain a trend now. Although this is not something that can rise perpetually because the stock of projects is limited, so one cannot expect this number to keep on declining. However, yes, the news is that the number of projects getting stalled has reduced and continues to remain low.
Latha: Any numbers?
A: I don’t recall the precise numbers but the fall is quite good. So I would say that the numbers are less than half of what they used to be a year ago for sure and they could be even lower than that.
Sonia: One of the three or rather couple of reasons for this stalling of projects was the lack of clearances, the land acquisition issues and also unfavourable market conditions. What are the reasons that have eased up leading to lower number of stalled projects?
A: A project announces itself to be stalled only after it more or less kind of gives up on hoping to get clearances in the foreseeable future. So the situation was quite bleak in the last year of the United Progressive Alliance (UPA) and many companies thought that things will not turnaround, the environment has got quite bad in terms of being able to acquire land or get environmental clearances.
Once the new government came in, the hopes were very high and many companies started saying that we are reconsidering our projects. Therefore, the rise in the hopes is what made a big difference. So correspondingly a project that was likely to get stalled now is less likely to get stalled because the expectation of clearances is much higher. There is also an increase in the clearances because we have also seen increase in the number of projects getting completed now. So I think there is good news for the stock of projects that has been on hand for some time.
Watch accompanying video for full interview.
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