Liquidity crunch delays investment decisions of India Inc: CMIE
05 Jan 2009
Failure to raise funds from the capital market combined with a sudden and sharp fall in global financial markets and a general liquidity crunch faced by commercial banks has lead to a postponement of investment plans by companies, according to a study published by the Centre for Monitoring Indian Economy (CMIE).
While realised industrial investment in the country totalled Rs40,000 crore in the first two quarters of fiscal 2008-09, investments commissioned in the third quarter of the fiscal was considerably lower at Rs13,309 crore, the economic think tank said in its study.
In a survey conducted by CMIE, its Capex team contacted companies tracking projects worth Rs6,00,000 crore in the country.
While 77 per cent of the investment is on, 23 per cent (projects worth around Rs1,40,000 crore) had either been shelved or deferred due to liquidity crunch, the CMIE said.
Of this, 81 per cent (Rs1,13,000 crore) is in the steel sector, CMIE pointed out.
Tata Steel alone has delayed its Jharkhand steel project expansion, costing Rs20,000 crore and Rs22,000 crore, respectively, in two phases.
Jindal Steel Wires (JSW) has also decided to go slow on its Rs59,500 crore capex plan.
While the companies have not scrapped the projects, investments have been delayed on account of other bottlenecks like rehabilitating displaced people and forest clearance.
On top of this, the negative global sentiment has added to the woes of Indian companies, the CMIE said.
Fresh investments announced by India Inc had also been lower at about Rs1,90,000 crore during October-November 2008, the CMIE report pointed out.
