This has continued into 2009, when we are likely to register negative growth, on an annual basis, for the first time since 1993. Reading about the recession abroad and seeing it translated into a sharp fall in energy prices, a negative psychology has overtaken consumers who have become cautious and have started to spend less. At the same time, businessmen have postponed investment projects.
The project has economic value when completed – in the sense that operating cash flows are positive, but much less than the interest on the debt it carries. If the debt is not written down, the project continues as an NPA, even while the promoter, knowing it cannot repay, loses interest.