Revival of public investment a must

Sanjeev Sharma

Tribune News Service

New Delhi, February 27

With projects worth Rs 8.8 lakh crore stalled as of December-end, the Economic Survey recommended that though private sector investment must remain the primary engine of long-run growth, revival of public investment was required, especially in the short term to revive investments in infrastructure.
It states that what the previous NDA government did for roads, the current government could do for the railways, strengthening the physical connectivity of the population.
The Survey notes that “the balance sheet syndrome with Indian characteristics” creates a web of difficult challenges that could hold back private investment.
To improve the investment climate and reduce the backlog of stalled projects, Economic Survey 2014-15, argues for revival of public investment in short term, especially in railways to act as an engine of growth in infrastructure sector. It argues that public investment cannot be a substitute for private investment, but is required as a complement and to crowd it in.
These recommendations come in the backdrop of a large number of stalled projects. The total stock of stalled projects stands at Rs8.8 lakh crore or 7% of GDP. The Survey states that the reason of stalled projects is different for private and public sectors. In private sector, credit-related factors dominate, while in the public sector, delay in regulatory clearances is the primary reason.