With inflation hovering close to 12 per cent, the proposed power projects may take a beating from increased input costs and recent down-turn in the core infrastructure industrial productivity, a study by Assocham said.
The fund requirement for the capacity addition of 68,869 MW during the plan period (2007-12) as estimated by Planning Commission is Rs 4,10,897 crore, which is now seen as substantially low, the study said.
Prices of key input materials that include steel, cement and aluminium have shot up by 25 per cent in the last two years.
The project cost of the power plants might also see a big upsurge because of rapidly rising fuel costs in the recent times, the study says, adding that the declining growth rate of core infrastructure industries could also pose problems for the projects.
The core infrastructure industries like cement, steel, coal have witnessed major slow-down in the growth rate during the first five months of 2008, the study said.
This downturn in the industrial activity may hamper the pace of power projects in the country.