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New Investment Low In India: Only 845 Billion Worth Projects Proposed In Q2 2017-18

Only 191 new investment project proposals were made by the private sector. This is the lowest level in over 13 years

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In the new data released by Centre for Monitoring Indian Economy, the investment sentiment in the country reached a new low in the September quarter of 2017. According to CMIE, projects worth Rs 845 billion were proposed during the quarter ended September 2017, which is termed as the 'lowest level of intentions to invest' seen in a quarter during the tenure of the Modi government.

"The investment announcements made in the September 2017 quarter are lower than the investments proposed even during the June 2014 quarter when investments had come to a halt for all practical purposes in the face of political uncertainty", says Mahesh Vyas, Managing Director and CEO, CMIE.

He further adds, "There was much angst then, against the new land acquisition law and corruption. Even during those uncertain days, new investment proposals added up to Rs 871 billion. Adjusted for inflation that would be worth nearly a trillion rupees today. In comparison, the Rs 845 billion worth of new investments in the quarter ended September 2017, is clearly a low level."

As per the data compilation of CMIE, the last ten quarters have remained anaemic in terms of new investments, the exception of a brief resurgence during 2014-15.

"A few sudden increases seen during these ten quarters were quickly followed by declines. There was never really a revival of investments during the Modi government," says Vyas.

New Investment Low 
During the quarter ended September 2017, Rs 986 billion worth of projects were either newly proposed or were revived. In comparison, Rs 3,312 billion worth of projects were either completed, abandoned, shelved or dropped for other reasons. The fall in the flow of new investment proposals is concentrated in the private sector.

Evaluating the investments by the count of investment projects, to eliminate the inflation, the quarter shows a sharp fall. Only 191 new investment project proposals were made by the private sector. This is the lowest level in over 13 years. The new proposals were dominated mostly by the government projects, in particular, state government projects.

Of the Rs 845 billion worth of investments into new projects proposed during the quarter, the largest is the Rs.200 billion Taj International Airport Project, Phase II and III at Jewar in Greater Noida. Three new runways would be added and the project is reported to require 4,413 acres of land. The project is scheduled to be completed in 2032. However, even Phase I has not made much progress. Its scheduled completion is in 2023, according to CMIE.

The government of Uttar Pradesh accounts for 24 per cent of all new investment proposals during the quarter.

State governments account for 43.5 per cent of all new investment proposals made during the quarter ended September 2017.Vyas terms this as unusually high and is so because of the Jewar airport expansion project. The data also highlights that the Bullet Train project announced by the government cannot be termed as a new project as it was first announced in February 2009, with its cost increasing from Rs.325 billion in 2009 to Rs1100 billion now.

Rising Stalled Projects
In another data released by the monitoring company, the value of stalled projects in the quarter ended 30th September 2017 increased to Rs 13.22 trillion, out of which the share of private sector rose for the fourth straight quarter. The private sector accounts for more than two thirds of the value of these stalled projects and is the highest since March 2014.

At the same time, the value of the new project announcements in the quarter ended stood at Rs 31000 crore, compared to Rs 1.79 trillion and Rs 1.69 trillion in the quarters ended September 2016 and 2015.

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