New investments attracted by Punjab registered a fall of over 63 per cent year-on-year i.e. from over Rs.7,200 crore in 2013-14 to just about Rs.2,600 crore in 2014-15, a just-concluded study by Assocham noted. Punjab failed to capitalise on its core benefits, thus, leading to a dismal economic growth scenario, the apex industry body said.
“However, new investments attracted by states across India increased by over 44 per cent y-o-y i.e. from about Rs.6 lakh crore in 2013-14 to over Rs.10 lakh crore in 2014-15,” the study, titled ‘Impact of delay in investment implementation in Punjab,’ pointed out. “Despite boasting of a robust infrastructure base, Punjab failed to lure investors over the years, evidently, as the new investments attracted by the state reached its peak level of Rs.36,650 crore in 2007-08 and declined to a meagre Rs.2,600 crore in 2014-15, registering a fall of about 93 per cent.”
Punjab attracted total outstanding investment worth just over Rs.2 lakh crore as of 2014-15, with services sector accounting for 39 per cent share followed by electricity (31 per cent), construction and real estate (23.5 per cent), manufacturing (6 per cent) and irrigation (1 per cent).
Gurdaspur-Rupnagar is the most sought-after region for investors in Punjab as the region accounted for about 33 per cent of the total outstanding investment attracted by the state as of 2014-15, followed by Amritsar-Patiala (27 per cent), Firozpur-Sangrur (20 per cent) and other multi-regions (20 per cent).
Some 302 projects with investment worth over Rs.1.6 lakh crore i.e. 75 per cent of the total outstanding investment attracted by Punjab as of 2014-15, remained non-starter with services sector accounting for 40 per cent share of these followed by construction and real estate sector (30 per cent), electricity (26 per cent), manufacturing (3 per cent) and irrigation (1 per cent). Out of the 302 projects that were non-starters, about 140 either reported cost or time overruns.
Poor execution of 52 investment projects pushed up their costs by over Rs.41,900 crore i.e. almost 45 per cent of their actual cost of over Rs.93,390 crore. About 60 projects reported time overrun ranging between 1-157 months. Projects in non-financial services sector garnered highest share of about 50 per cent in projects reporting cost escalation followed by electricity (39 per cent), construction and real estate (6 per cent), manufacturing (3 per cent) and irrigation (2 per cent). Projects in construction and real estate sector reported maximum cost escalation to the tune of 72 per cent of their actual cost followed by non-financial services (67 per cent), irrigation (64 per cent), manufacturing (42 per cent) and electricity (40 per cent).
Ownership wise, private-sector owned projects had highest share of about 69 per cent in total projects that reported cost escalation while state government-owned projects accounted for 28.5 per cent and central government owned projects accounted for the remaining share. Private-sector owned projects also reported highest cost escalation of 70 per cent followed by state government owned projects (35 per cent) and central government owned projects (28 per cent).