The economic feasibility basically deals with the marketability of the product. Basic data regarding demand and supply of a product in the domestic market so also the marginal and artificial. Man-made shortages are not to be reckoned as genuine demand and the market analysis is an essential part of a full appraisal. Projection or forecasting of demand is no doubt is no doubt a complicated matter but is of vital importance. Equally importance is to examine the sales promotion proposed by the enterprise and its adequacy.
In this case three questions are important. They are as follows:
1) Whether the project is coming up in a priority sector and its implementation is likely to contribute significantly to the development of the sector and economy as a whole?
2) Whether the project is likely to contribute to the development of the region?
3) Whether the outlay on the project in terms of quantities of various scarce resources such as capital, labour, raw materials, managerial ability etc. ?
4) Does the project creates direct and indirect employment?
5) Does the investment in project results in adequate cash generations which is higher than the inflationary rates?
In this case three questions are important. They are as follows:
1) Whether the project is coming up in a priority sector and its implementation is likely to contribute significantly to the development of the sector and economy as a whole?
2) Whether the project is likely to contribute to the development of the region?
3) Whether the outlay on the project in terms of quantities of various scarce resources such as capital, labour, raw materials, managerial ability etc. ?
4) Does the project creates direct and indirect employment?
5) Does the investment in project results in adequate cash generations which is higher than the inflationary rates?