Projects worth Rs 1,78,600 cr stalled

In all, 113 private sector projects (with an investment of Rs 1,26,838 crore) were abandoned in the last two or three years. The industry segments which recorded a huge number of stalled projects were chemicals (30 projects involving an investment of Rs 41,941crore), basic metals (13 projects involving an investment of Rs 23,500 crore) and textile (12 projects worth Rs 4,700 crore). State-wise, Andhra Pradesh topped the list with 33 projects getting stalled where an amount of Rs 43,011 crore would have been invested. Maharashtra, the most industrialised state, followed with 22 projects worth Rs 20,608 crore.

Several public and private sector projects were abandoned mid-way for various reasons. Even big business groups which found the going tough are still struggling to get out of the problems. For example, in the case of Nocil, the withdrawal of Royal Dutch/Shell of the UK forced the company to stall the original expansion plan of Rs 6,000 crore. "After acquiring the Shell’s holdings in the company, the Mafatlal group decided to carry out the expansion by itself. However, the company could not raise the required fund resulting in the project implementation considerably," CMIE said.

Hindustan Petroleum Corporation (HPCL) which planned a Rs 5,000-cr project atVaranasi, was forced to abandon it as the Ministry of Environment and Forests made it clear that another refinery would endanger the ecology of the area. Following in the footsteps of the Ambanis and the Ruias, the O P Jindal group also proposed a 100 per cent export-oriented refinery project in Visakhapatnam, at a cost of Rs 3,600 crore. Due to the ambiguous policy on privatisation of the oil refining sector, the company decided to shelve the project. "Moreover, the promoters felt that any investment of around Rs 4,000 crore can be committed to a project only if there is a clear cut long-term policy," CMIE said.

Even several multinational companies also gave up their India plans. Hyundai of South Korea had received a letter of intent to set up a Rs 3557 crore project at Sonbhadra in UP. However, the state government called off the project in May 1997 as the coalition partner (BJP) of the government raised protests against the power project. The party was against privatisation of the project and wanted itto be set up with the assistance of OECF, Japan.

Bihar State Electricity Board (BSEB) abandoned two power projects – at Nabinagar and North Karanpura – with a capital outlay of Rs 3,500 crore each for technical and environmental reasons. Similarly, the AP state government decided to cancel the agreement with Hadosum for a Rs 3,500 crore power project. The AP government also cancelled the Rs 3,500 crore power project at Manuguru for which it earlier signed an agreement with the Sanghi group.

A mega automobile project was another casualty of the slow pace of economic reforms, demand slowdown and government’s decision to go back on reforms. Chrysler Corporation of the US – one of the big three auto giants in the US after General Motors and Ford – shelved its Rs 3,500-crore passenger car project. The company had proposed to invest $ 700-800 million in the first phase. Ashok Leyland also shelved its Rs 2,000-crore car project in TN due to sluggish market conditions.

The other major power projects stalledrecently are: National Hydro-Electric Power Corpn (Rs 3143 crore project in Ranchi), Sikkim Electriciy Board (Rs 3,231 crore Teesta project), Aditya Birla group’s Roza power project (Rs 2453 crore) and Gujarat Power Corporation (Rs 2152 crore project at Pipavav). Moreover, refinery projects of GSX Petroleum (Rs 2,500 crore in AP) and Nagarjuna Fertiliser (Rs 2,500 crore in AP) were also stalled. Major steel projects which failed to see the light of day included Kirloskar Oil Engines (Rs 3290 crore steel project in Karnataka), L&T (Rs 3,000 crore in West Bengal), Uttam Steel (Rs 3,000 crore project in Cuttack, Orissa) and O P Jindal group (Rs 2,600 crore).