The private sector’s new projects announced dropped 77% to Rupees 1.9 trillion in Q3FY24, and that of the government sector fell 81% to Rupees 0.3 trillion.
The share of the private sector in new investment projects rose amid a slowing pace of government investments in the December quarter. But the value of new investment projects declined sharply by 78% on year to Rupees 2.1 trillion.
The Centre front-loaded its budget capex in the early part of the current financial year – growth in April-June was 59%. However, it subsequently curbed such spending, with the April-November growth of just 31%, as imminent elections necessitated expenditure reprioritisation.
The private sector’s new projects announced dropped 77% to Rupees 1.9 trillion in Q3FY24, and that of the government sector fell 81% to Rupees 0.3 trillion, data from the Centre for Monitoring Indian Economy (CMIE) revealed.
New projects announced had touched an all-time high of Rupees 14.2 trillion in the three months to March this year on the back of robust private sector projects of Rupees 12.6 trillion. Subsequently, in the three months to June, project announcements more than halved to Rupees 6.8 trillion and these fell further to Rupees 1.9 trillion in the quarter ended September.
However, there was a marginal uptick in the quarter ended December this year, largely because of a sequential rise from Rupees 1.2 trillion to Rupees 1.9 trillion in project announcements by the private sector. The share of private sector in new projects rose from 62.5% in the September quarter to 87.4% in the subsequent one, which was also the second-highest quarterly share of the sector in recent years, after a 88.4% rise in the quarter ended March, 2023.
New projects announced by the government have been falling sequentially since the three months to June this year. From Rupees 1.7 trillion in January-March this year, they dropped to an all-time low of Rupees 0.3 trillion in the three months to December, indicating that the government is going slow on capital expenditure.
Projects completed in the quarter ended December this year dropped to Rupees 1.2 trillion from Rupees 1.9 trillion in the same quarter last year and down from Rupees 1.4 trillion in the quarter ended September this year.
The government’s final consumption expenditure grew 12.4% in Q2FY24, albeit on a negative growth of 4.1% during Q2FY23.
Chief economic adviser V Anantha Nageswaran had recently underlined that private capital formation is the most important catalyst to spur the growth engine. While external uncertainties would always remain, it should not deter the private sector from investing, he said.
Amid concerns that the much-delayed private capex cycle may not have taken root yet, Corporate India recently said with capacity utilisation in many sectors being 75-80%, if not higher, a strong momentum in private investments was firmly around the corner.
Pointing out that fresh investments have already started in many sectors, senior company executives maintain that strong corporate balance sheets and an incipient revival in the rural economy would aid private capex.
The data from CMIE show that the total value of projects completed in the three months to December 2023 was Rupees 1.2 trillion, lower than Rupees 1.9 trillion in the same quarter the year before. Also, the total value of investment projects dropped to Rupees 3.3 trillion in October-December 2023, lower than Rupees 3.6 trillion during October-December 2022.
Source:financialexpress.com