States Matter

Apr 07 2014, 23:03 IST
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SummaryNew government’s ability to kick-start growth depends on what state governments do

It is just as well that the BJP’s manifesto talks of greater cooperation between the Centre and the states since, if there is any hope of getting India’s stalled investment cycle back on track, a lot will depend upon state governments. Of the top 50 stuck projects in the CMIE list of 733 projects—they account for around two-thirds of the value—only 8% are stuck on account of just the central government. Over half are stuck on account of not being able to get land—a state subject. Another 25% were stuck due to not being able to get coal or gas. Theoretically, this is a central subject—albeit one on which it has little control—but unless the power sector becomes more viable, and that requires action by the state, these projects aren’t going to move.

An analysis of 311 stuck projects by the statistics and programme implementation ministry, similarly, shows just 29 are stuck due to environmental reasons. Look at it anyway you like, the role of the state governments is critical.

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