'Investment famine to be history'

Referring to the Rs 42,340 crore (Rs 423.40 billion) new investment plans of automobiles and ancilliaries, metals, chemicals, electronics, paper and pharmaceutical sectors, NCAER has said it could end the 'investment famine' and increase production capacities.

Expressing concern over the sustainability of the present industrial upturn due to absence of a turnaround in investment demand, the Delhi-based economic think-tank pointed out to the new planned investment in manufacturing by companies like IOC, which envisaged Rs 25,000 crore (Rs 250 billion), followed by BSES and NALCO with Rs 3,000 crore (Rs 30 billion) each.

The other planned manufacturing investments include Tata Steel (Rs 1,700 crore), Tata Chemicals and LG Electronics (Rs 1,200 crore), Hyundai (Rs 1,100 crore), Balco and Indo

Rama (Rs 1,000 crore), Ispat (Rs 890 crore), Jindal Polyester and Jindal Stainless (Rs 600 crore each), JSPL (Rs 550 crore) and Finolex Industries, Shaw Wallace and Moser Baer (Rs 500 crore each), the National Council of Applied Economic Research noted.

In its quarterly review, NCAER said: "This perhaps could well end the investment famine, witnessed since mid-nineties," and added that "a major concern with regard to sustainability of the present industrial upturn had been absence of a turnaround in investment demand."

Most of the capacity addition was going to be spread over 2-3 years, it said referring to the investment plans.

NCAER said heavy industries like oil, cement, steel and aluminium were already operating at a capacity of 86 per cent or above.

It said there were no worries over short-run industrial growth figures, but added that anxiety was there on the fiscal front.

"The recent policy announcements to boost industrial growth have been welcomed, but they have also raised concerns about the fiscal deficit. They (announcements) may cost the exchequer Rs 12,200 crore (Rs 122 billion)," the economic think-tank said.

Pointing out that nearly 600 companies were planning to raise over Rs 50,000 crore (Rs 500 billion) from the primary markets, it said with primary capital market reviving and indication of investment demand picking up, "the prospect for a durable industrial upturn is very good."

NCAER, however, said the sustained bull run in secondary market had not fuelled the primary market during 2003 with only 15 public issues hitting the market, raising Rs 2,194 crore (Rs 21.94 billion).