New project investments by private companies in India at 16-year low: CMIE

Indian companies announced new projects worth Rs 95,300 crore in the quarter ending September, a 59% decline compared to the same period last year.
New project investments by private companies in India at 16-year low: CMIE
New project investments by private companies in India at 16-year low: CMIE
Written by:

Fresh data released by the Centre for Monitoring of Indian Economy (CMIE) for the quarter ending September 2019 indicate that investments by the private sector continues to be low, in fact it could be at its lowest in the past 16 years, a Mint report states. The only silver lining is that the public sector investments has stepped up compared to the previous quarter, though when pitted against the investments made in the same quarter a year ago, they fall behind.

The absolute figures look somewhat like this; in the quarter, July-September this year, new projects worth Rs 95,300 crore were announced. This is definitely higher than the previous April-June quarter by 16% but a hefty 59% lower than that in the July-September quarter of 2018.

However, a closer look at the percentages would reveal that the fresh investments in the private sector fell a whopping 70% from the previous year though quarter on quarter there has been a marginal 5% hike. The figure of new capital expenditure announcement by the private sector in the quarter, as mentioned above is the lowest in the past 16 years. Again, as indicated, it is the public sector spending on projects that constitute more than half of the overall investment figures.

While traditional sectors like manufacturing are still showing decline along with the services sector, it is the power sector that has been able to lift the mood by showing a 14% increase in capex in the September quarter.

An analysis of the CMIE data reveals that the credit offtake situation has hardly improved despite all the steps taken by both the government and the RBI. The banking regulator has been constantly lowering the benchmark interest rates while the government has been releasing funds to the banking sector and announced steps to ensure the NBFCs receive funds at their end to enable them to resume lending. CMIE data reveals that details of projects stalled at various levels and the major reason being attributed for the stalling of the projects is lack of finance. In fact, the value of projects stalled as on date is the highest in the history of CMIE reporting the economic data, which began in 1995. Giving out further details, the segments, power, manufacturing and services add up to over 90% of all projects stalled. 

Related Stories

No stories found.
The News Minute
www.thenewsminute.com