Capex blues: New project announcements plunge to multi-year low in Q1
₹59,931 crore worth of new projects across the country during the quarter, the lowest in over a decade and down 92% year-on-year, showed the latest data from the project-tracking database of the Centre for Monitoring Indian Economy (CMIE). The data is provisional and can be updated later. Private companies continued to lead new investments in the June quarter, but they, too, fell below ₹1 trillion for the first time since the June quarter of 2020, which saw a hit due to the covid-led nationwide lockdown.
Private companies announced projects worth ₹35,206 crore, while the figure for the government sector was ₹24,725 crore. Elections are accompanied by the model code of conduct, which halts much of government activity and leaves companies waiting. In 2023-24, capital expenditure announcements declined by 31% to ₹27.1 trillion.
New investments were down across the board. Manufacturing, which saw the highest sequential jump in the preceding two quarters, took the biggest hit, dropping from over ₹7 trillion (lakh crore) in the March quarter to ₹20,568 crore. Other sectors including electricity, construction and real estate, and services experienced sequential declines of 84-93%.
The latest data for the mining sector was not available. While new investments were dismally low in the June quarter, historical data shows that a weaker investment mood is typical of the first quarter of a fiscal year, and that the trend is more pronounced in Lok Sabha election years. However, among election years, too, this marks the first time since the April-June 2009 that overall new announcements have fallen below ₹1 trillion.
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