Page 21 - CII Artha Magazine

Domestic Trends

Investment Further, as seen in the graph share in new project Government Capex Remains Robust Completed Rs 1.47 lakh crore in the

previous quarter and Rs 1.39
below, the private sector has
announcements from 18.4 per
Investments
lakh crore in the comparable
cent in Q1FY24 to 32.3 per
always had a higher share in
in Apr-Aug FY24
quarter last year.
cent in Q2FY24, while that of
the new project
Trends announcements than the the private sector moderated In line with the per cent between The data suggests that the
April-August FY24
government’s decision to
from high of 81.6 per cent in
government. The recent
frontload capital expenditure compared to the
decline in value of completed
Q1FY24 to 67.7 per cent in
quarter, however, witnessed
and complete 80 per cent of
projects was driven by the
corresponding period last
Q2FY24.
an uptick in the government’s
the proposed spend by end
year. Key ministries which
private sector, while the value
of December 2023, the
Share in New Project Announcement (%)
official data released by
expenditure include that of
government recorded a
Controller General of attracted higher capital The value of completed of completed projects by the
railways, road transport &
double-digit growth as
projects slumped on both
100.0 Accounts (CGA) shows that highways, shipping, atomic sequential and annual basis compared to the previous
80.0 81.6 67.7 overall government capex energy and civil aviation. standing at Rs 1.0 lakh crore quarter.
has risen by a whopping 48.1
in Q2FY24 as compared to
I nvestments are crucial to signs that the private sector, 60.0 Top Six Ministries Leading the Public Capex Momentum
too, is working in tandem
sustain growth. The
government has been taking with the government to 40.0 32.3
the lead in pushing capex kickstart the investment cycle, 20.0 Ministry Capex Capex Growth
projects to bolster growth in which is essential for spurring 18.4 April-August April-August (y-o-y
the economy. There have been growth via its multiplier effect. 0.0 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 FY24 FY23 per cent)
(Rs crore) (Rs crore)
Government Private sector
Multiplier Effect of Capex on the Economy Source: CMIE Capex database & CII Research Ministry of Railways 112708.4 6724.9 67.6%
Increased Increased Increased Increased
Infrastructure CapEx Employment Consumption Capacity Ministry of Road 110165.1 109615.6 0.5%
Transport & Highways
(Rural+Urban) Demand Utilization As per the data from CMIE,
SERVICES (OTHER the new projects announced
THAN FINANCIAL) under the sector mainly Ministry of Shipping 565.6 152.5 270.9%
Help grow Economy PLI would help New Investment Opportunities ATTRACTED MORE comprised of machinery and Department of 6540.8 4404.4 48.5%
and Tackle Inflation supply side for Pvt sector INVESTMENTS IN chemical products. Other Atomic Energy
Q1FY24 sectors attracting higher level
of new investments include
Manufacturing sector, despite services (other than financial) Ministry of Civil Aviation 43.3 3.4 1173.5%
This section analyses in detail the recent trends in investment based on the CMIE Capex database, which would help assess the impact slowdown in external and electricity. Within
of recent initiatives being taken by both government and industry to facilitate investment revival. demand, attracted higher services, transport services Source: CGA & CII Research
investments in Q2FY24. did well.
New While high frequency there has been a noticeable unutilised capacity in some Additionally, while new project A break-up of data showed
improvement in the capacity
investment indicators
sectors might potentially be a
that private sector investment,
announcements are a good
Investments remained somewhat stable in utilisation of some sectors, contributing factor to the Sectoral Breakup of New Project barometer of business measured by the value of
Announcements (Rs lakh crore)
Q2FY24, the moderation in
decline in new investments.
especially in the
the pace of new investments manufacturing sector. The sentiments, the value of ongoing investments, increased
to Rs 105.5 lakh crore in
ongoing investments is a
NEW PROJECT might be seasonal as in the Sectors Q1 FY24 Q2 FY24 better indicator for gauging Q2FY24, registering a
ANNOUNCEMENTS past, the first half of most of Manufacturing 0.92 0.64 the investments happening on double-digit growth of 23.1
FALL STEEPLY IN the fiscal years has seen a Trends in New Project Announcements (Rs lakh crore) ground as it nets out the value per cent on an annual basis,
Q2FY24 slower uptick, with the 16.00 -Machinery 0.16 0.33 of stalled projects from the but remained a tad lower than
investment cycle picking up in
the latter part of the year. 14.00 13.44 outstanding projects. Latest Rs 105.7 lakh crore in the
New project announcements 12.00 -Chemicals & chemical products 0.52 0.12 data suggests that while the previous quarter. On the other
in the second quarter of the New investments in the 10.00 9.22 8.90 total value of ongoing hand, even though the value of
current fiscal (Q2FY24) private sector witnessed a 8.00 -Metals & metal products 0.05 0.06 investments moderated albeit ongoing investments made by
slumped both on a sequential significant moderation to Rs 6.00 6.43 6.56 5.25 12.19 6.56 marginally to Rs 243.3 lakh the government contracted
basis as well as on an annual 0.82 lakh crore in Q2FY24 4.40 4.27 4.52 4.63 8.11 Services (other than financial) 4.52 0.30 crore in Q2FY24 from Rs both on a sequential and
basis. The overall new project from Rs 5.35 lakh crore in the 4.00 2.40 2.78 2.96 3.84 5.35 244.6 lakh crore in the annual basis to stand at Rs
announcements in Q2FY24 fell previous quarter. The new 2.00 2.00 1.49 1.56 2.79 1.93 1.41 1.25 1.21 1.22 0.82 -Transport services 4.42 0.25 previous quarter, it was higher 137.8 lakh crore, its share in
0.79
by more than half to Rs 1.22 project announcements also 0.00 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 0.39 than Rs 225.5 lakh crore in the the total ongoing investments
lakh crore from Rs 6.56 lakh plummeted by 79 per cent on Electricity 1.02 0.26 corresponding quarter last remained high at around 57
crore in Q1FY24 and Rs 5.25 an annual year-on-year basis. Government Private sector Total investment year, marking a growth of 7.9 per cent.
lakh crore in the While the economic Source: CMIE Capex database & CII Research Source: CMIE Capex database & CII Research per cent in year-on-year terms.
corresponding period last year. landscape remains uncertain,
20 ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 21
QUARTERLY JOURNAL OF ECONOMICS
QUARTERLY JOURNAL OF ECONOMICS
SEPTEMBER 2023 SEPTEMBER 2023