With some Rs 54,000 crore of their funds stuck in 215 projects, banks want the Central and State Governments to get their act together fast on statutory clearances.
Delays in clearance for mining coal/iron ore blocks as also for constructing rail siding are holding up these projects in the power, road, iron and steel, cement and port sectors with investments aggregating Rs 7 lakh crore.
Each project involves an investment of at least Rs 250 crore, said a senior public sector bank official in the know of the status of the projects.
According to another top public sector bank official, if the government wants to revive growth and create employment, it has to speed up statutory clearances for big projects.
“The Central ministries and departments and their counterparts in the States should jointly review the status of large projects, especially when it comes to statutory clearances, at periodic intervals,” the official said.
While the government has taken some positive steps in the last six months, including liberalising foreign direct investment in retail, aviation, broadcasting and insurance and setting up of a Cabinet Committee on Investment, a Bank of India official felt that completion of the stalled projects where substantial money has already been invested, is crucial for the economy.
RBI document
In its macroeconomic and monetary development document, the Reserve Bank of India has observed that lack of reliable power supply has emerged as a challenge to capacity utilisation by small- and medium-scale industries.
The central bank also said that policy uncertainties in areas such as iron ore and coal mining have adversely affected the output of the steel and power industries.
A turnaround in the investment cycle, which has been in downturn for two years, crucially hinges on increasing public investment, drawing more private investment and resolution of issues in the power and road sectors, said the document.
Even as over 200 projects remain stuck, during the current financial year up to December 31, public sector banks have received 126 new proposals involving a total outlay of Rs 3.55 lakh crore. These projects are in various stages of appraisal and sanction.