Stalled projects worth Rs 8.8 lakh crore, or 7 per cent of GDP, are holding up investments in the economy, impacting corporate balance sheets and public sector banks which have extended loans. Chief Economic Advisor Arvind Subramanian, a votary of increased public investment to push growth, suggested that dealing with the top 100 stalled projects can address over 80 per cent of the problem. In addition, the Economic Survey has suggested that reworking the public-private partnership architecture could help declog the system.
´Combining the situation of Indian public sector banks and corporate balance sheets suggests that the expectation that private sector will drive investment needs to be moderated. In this light, public investment may need to step in to recreate an environment to crowd-in private sector investment in the short term,´ the document, authored by a team led by Arvind Subramanian, said.