BackCapex investments stay muted in the September quarter: CMIE data
Around ₹1.2 trillion worth of projects were announced by companies during the July-September period, compared to ₹6.6 trillion in the preceding quarter, provisional data on CMIE’s project-tracking database showed.
PremiumNew investment proposals continued to fall precipitously in the September-ended quarter, both on a sequential and a year-on-year basis, new data from the project-tracking database of the Centre for Monitoring Indian Economy (CMIE) showed.
In the run-up to the Lok Sabha elections next year, ₹1.2 trillion worth of projects were announced by companies during the July-September period, compared to ₹6.6 trillion in the preceding quarter. This marked a whopping decline of 82% since the June quarter, and 77% since the same quarter a year ago. The figures are provisional and may be updated later.
While both government-owned and private capex announcements declined, the contraction was much starker in the public sector. In the June quarter, the worth of public sector announcements had shrunk nearly 5% quarter-on-quarter, but this widened to 68% in the just-ended quarter. Private sector firms continued to tread with caution, with over 55% decline during the period.
The data denotes the capital expenditure plans of enterprises in India, both public and private, and Indian and foreign. Some of the prominent projects announced during the quarter include Waaree Energies' Kankani Industrial Area solar cell and modules manufacturing unit project worth ₹15,750 crore and Avaada Electro's manufacturing unit in Khordha, Odisha worth ₹11,300 crore.
As the 2024 polls draw closer, new launches in the next two quarters are likely to dwindle. To be sure, before the 2019 elections, around ₹9.9 trillion worth of projects were announced between April and September 2018, which dropped to ₹9.2 trillion in the two following quarters. Similarly, in the run-up to the 2014 polls, the value or project announcements dropped 15% in the second half of the 2013-14 compared to the first six months, the CMIE data showed.
The sentiment weakened across sectors: the projects in the services (other than financials) segment fell the most, around 93.4% sequentially. This was followed by an 85.4% decline in mining and 83.2% drop in construction and real estate. New proposals have seen a broad-based decline over the past few quarters with an unusual spurt in the March quarter, the year-ending period.
The pace of project completions also fell sharply. The worth of projects that got completed in the September-ended quarter was lower by 72.3% sequentially after a spurt in the preceding quarter. Projects worth ₹2.2 trillion were completed during the last three months against ₹7.9 trillion in the June-ended quarter. This was the first sequential decline in the value of projects being completed in the last four quarters.
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