Prospects of Project Appraisal in a Changing Economic Scenario
The Chartered Accountant, pp. 271-275, October 1992
Posted: 24 Jan 2005
The new industrial policy, which is both bold and liberal, aims at doing away with all that stands for non-performance, stagnation, low productivity, mis-management, corruption, poor quality, and a host of other age-old practices. The new order demands our lifeline-industries to grow with complete financial sufficiency. The Development Financial Institutions (DFIs) are already playing a role of sorts in the healthier functioning of industries. But they have their own limitations. The authors suggest that DFIs should appraise their project appraisal systems to suit new demands.
What will be the future of social cost benefit analysis (SCBA) in view of the shift of the Government policy and public mood towards market-competition-induced investment choice and privitisation? The need for social desirability of projects remains as ever. Thus, the DFIs will have to withstand the pressure of entrepreneurs who are motivated by profit-maximization objective, to reject SCBA in favour of the sole criterion of commercial profitability.
Keywords: Project Appraisal, Social Cost Benefit Analysis, India, Domestic Resource Cost, Effective Rate of Protection, Economic Rate of Return
JEL Classification: G20, G21, G28
Suggested Citation: Suggested Citation