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Steel, aluminium projects fall behind planned investments

The gap between planned investments in steel and aluminium projects has widened during 2003 to 2009 due to various issues like land acquisition problems and statutory permissions

While investments in steel projects have been on a constant rise ever since 2003, the gap between planned investments and implementation of these projects has more than doubled. Problems such as land acquisition, rehabilitation and permissions from various government authorities are cited as reasons for the widening of this gap.

According to data from ProjectsToday—a website that tracks various projects—in 2003, the total worth of investment planned in steel projects and the total worth of projects in the implementation phase were at par at around Rs25,000 crore. Post 2003, though the planned investments have increased rapidly, the growth in the implementation rate has been abysmal. During 2003 to 2009, planned investment in steel projects went up to Rs4 lakh crore while implementation miserably fell behind at Rs1.50 lakh crore.

“The high investments were encouraged by investment-friendly announcements by states like Orissa and Jharkhand, global demand for steel before recession and huge iron ore deposits. Due to these factors, the number of announcements for such projects increased and there were a number of memorandums of understanding (MOUs) signed for various projects. These reflect in the total amount (of) investments planned. But issues like land availability, other permissions like environmental clearances and rehabilitation plans pose a problem in actual implementation of these projects,” said Shashikant Hegde, chief executive officer, ProjectsToday and director, Economic Research India Ltd in the sidelines of  Minerals and Metals Review seminar held last week.

In 2005, the total planned investment in steel projects was around Rs1 lakh crore. However, the rate of implementation continued to stagnate at below Rs50,000 crore with a marginal increase from the 2003 level. Post 2005, the gap between the total investments planned in steel projects and the amount of projects in the implementation phase increased drastically. From a marginal difference in 2003, the gap widened to Rs1 lakh crore in 2005–06. It further increased to a difference of Rs2 lakh crore in 2008.  In 2009, the total planned investment in steel projects stood at Rs4 lakh crore against just Rs1.50 lakh crore worth of projects in the implementation phase, showing a huge gap of Rs2.50 lakh crore.

A similar scenario is playing out in aluminium projects as well. In 2002, investments in aluminium projects and projects in the implementation phase were below Rs20,000 crore. In 2003, the investment in aluminium projects increased to Rs40,000 crore, while the projects in the implementation phase stagnated at below Rs20,000 crore. In 2006, the investments in aluminium projects touched Rs1 lakh crore, while the projects in the implemented phase rose to about Rs30,000 crore. In 2009, the total planned investment in aluminium projects stood at Rs1.80 lakh crore and the worth of projects in the implementation phase stood at around Rs50,000 crore.
 

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