An Analysis of Project Investment in Construction Sector of India

Capital investment decisions are crucial to an economy. The present study analyses the project scenario of India. Data of the Centre for Monitoring Indian Economy was used for the analysis. Six projects were analysed for examining reasons for the dropping of projects and found that the reasons differs from project to project. The study found that: (1) the dropping/shelving of investment projects are increasing; (2) share of aggregate value of projects under implementation in education, irrigation and commercial complexes sector indicates a decline; (3) the stock of stalled projects has been rising at an alarming rate and it is dominated by the private sector, especially in the last five years; and (4) new investment announcements are declining. A linear regression analysis was carried out to establish the relation between Gross Domestic Product and monetary value of projects under implementation. The significance level of the t-test is 0.00. Therefore, the stagnation in project completion of investment projects can affect the development of manufacturing and service sectors and subsequently employment, income and aggregate demand and thereby the faster rate of growth of the economy.