Page 17 - CII Artha Magazine

Domestic Trends

Investment This is corroborated by the much above the pre Ministry September FY23 September FY22

previous graph which shows
pandemic levels.
Capex April-
Capex April-
that new investments made
by the government, both at
MANUFACTURING
(Rs crore)
(Rs crore)
the centre and the state
Trends levels, have come down SECTOR CONTINUED Department of 6212.5 4426.1
TO ATTRACT PRIVATE
significantly during in the first
INVESTMENT IN
Atomic Energy
two quarters of FY23 as
Q2FY23
compared to new public
investments made during the
corresponding period in FY20 Despite the uncertainty, the Ministry of 88548.3 46261.9
Railways
indicating that public manufacturing sector has
investments have yet to continued to attract higher
achieve pre-pandemic levels new investments in Q2FY23. Ministry of Road 121893.2 73787.1
of growth. On the other As per the CMIE capex data, Transport &
Highways
hand, the slowdown the sector recorded 21.5 per
I nvestment is a crucial Overall new investments in experienced in new cent more investments in the
the economy have slowed to
determinant of productivity
in the economy and can be a Rs 3.26 lakh crore in Q2FY23 investments made by the quarter. Among the key Ministry of 293.8 126.1
Shipping
sectors, chemical & chemical
private sector before the
differentiating factor in from Rs 4.39 lakh crore in pandemic (Q1 and Q2 of products, electricity, services
whether an economy the previous year, recording
experiences a healthy growth a sequential decline of FY20) was reversed as it (other than financial) and Source: CGA
rate or not. 25.8 per cent. picked up significantly in FY22. information technology
Thus, new private attracted higher investments
Since the onset of the A breakup shows that investments, despite the in the quarter. This is also corroborated by Electricity sectors
pandemic, the government investment in both the public slowdown in FY23, remain data from CMIE capex which include investments in
has taken the lead in pushing and private sectors have again alludes to a rise in renewable electricity
capex projects to revive experienced a sequential government capex. (solar power projects)
growth in the economy. There decline in Q2FY23, with new Accordingly, the top sectors and services (other than
are signs that the private investments made by the Top sectors attracting private attracting investments in financial) include mainly
sector is also working in government falling at a much investment in Q2FY23 (Rs lakh crore) Q2FY23 include electricity, those of transport
tandem with the government faster pace as compared to 2.50 services (other than financial), logistics services and
for kickstarting the that by the private sector. The much below potential. This is dampener, forcing companies 2.2 1.9 communication services, tourism.
investment cycle which is new investments made by the owing to the uncertainty to postpone some of their 2.00 information technology and
critical for economic growth, private sector in Q2FY23 hovering over the global planned expansion. This trend 1.50 transport services.
although the momentum still stood at Rs 3.1 lakh crore as environment as a result of is also reflected in the 1.00
needs to pick up. compared to Rs 0.2 lakh which new investments by OBICUS survey done by the 0.7
crore made by the Indian companies have RBI, where the capacity 0.50 0.2
This section analyses in detail government. continued to lose steam in utilization (CU) for the 0.00 0.1 Top sectors attacting higher government
the recent trends in Q2FY23. The recent increase manufacturing sector Manufacturing Chemicals & chemical Electricity Services (other than Information investments in Q2FY23 (Rs crore)
investments based on the The slowdown in government in interest rates and decelerated to 72.4 per cent products financial) technology
CMIE Capex Database, which sector project execution has slowdown in developed in Q1FY23 from 75.3 per 12000.0 11,005.2
would help assess the impact especially been in the roads countries is seen to be a cent in the previous quarter. Source: CMIE capex database & CII Research 10000.0
of recent initiatives being sector. For instance, according Note: Data extracted on 10th October 2022 8000.0
taken by both the to government estimates, 6000.0
government and industry to road construction that was Trend in New Project Announcements (Rs lakh crore) 4000.0 3,945.2
facilitate investment revival. progressing at the rate of 40 1,256.3 1,202.0
kms per day, till recently, has 10.0 2000.0 600.0
New now slowed down to about 8.0 GOVERNMENT robust rise. In fact, according 0.0 Electricity Services (other than Communication Information Transport
services
technology
20 kms per day. The major
financial)
services
6.0
to data released by CGA,
Investments reasons for the slowdown 4.0 6.3 4.0 CAPEX REMAINS overall government capex has Source: CMIE capex database & CII Research
have been delays in land
acquisition, delayed payments, 2.0 2.2 3.1 ROBUST SO FAR gone up by 49.5 per cent Note: Data extracted on 10th October 2022
during April-September FY23
0.0
and dispute resolution delays compared to last year. Key
OVERALL NEW leading to financial stress. Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Despite the decline in new ministries attracting higher
INVESTMENT public investments, at the capex include that of atomic Going forward, improvement pace and would also
REPORTS A At the same time investment Government Private sector Total aggregate level capital energy, roadways, railways and in fresh investments would indirectly help tame
SLOWDOWN IN in the private sector, while expenditure made by the shipping. ensure that the economy inflationary pressures in
Q2FY23 higher than that of the Source: CMIE capex database & CII Research government has witnessed a keeps growing at a healthy the country.
Note: Data extracted on 10th October 2022
government in Q2FY23, is still
16 ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 17
QUARTERLY JOURNAL OF ECONOMICS
QUARTERLY JOURNAL OF ECONOMICS
DECEMBER 2022 DECEMBER 2022