The lowest value since September 2009, when the Centre for Monitoring of Indian Economy (CMIE) started collecting data on capex plans of the government and the private sector, is partly owing to the deferment of decisions amid the election period.
The Asian Development Bank (ADB) on Wednesday retained India’s GDP growth forecast for the current financial year at 7%, as it expects the industry sector to “grow robustly” driven by manufacturing and construction activity. The ADB’s projection is the same as that of the International Monetary Fund (IMF), which raised the country’s growth projection to 7% from 6.8% earlier.
The IMF, however, has cited a revival of private consumption — particularly in rural areas — the reason behind the upward revision. Both the organisations, however, have a lower growth forecast than that of the Reserve Bank of India (RBI), which is 7.2%.The ADB said agriculture is expected to rebound in the current financial year amid forecasts of an above-normal monsoon, while investment demand remains strong, led by public investment.
The IMD has projected southwest monsoon in the June-September period to be above normal, at 106% of the benchmark. However, so far, the monsoon is 2.5% below the benchmark. Moreover, the value of new investment projects announced was down 92% on year to `59,900 crore in the June quarter, extending a declining trend of the previous three quarters, casting serious doubts on the strength and durability of the new private capex cycle.
The lowest value since September 2009, when the Centre for Monitoring of Indian Economy (CMIE) started collecting data on capex plans of the government and the private sector, is partly owing to the deferment of decisions amid the election period. But the general feebleness of the investment cycle is unmistakable, given the contraction phase for private-sector project announcements since the second quarter of last fiscal.
Source:financialexpress.com