The Indian economy has started 2019 on a weak note as new investments in the recently-concluded December quarter of 2018-19 plummeted across the board, according to a report by the Centre for Monitoring Indian Economy (CMIE). Almost every major sector has shown signs of slowdown in terms of fresh investments, the report said.
Indian companies announced projects worth Rs 1 lakh crore, which is 53 per cent lower than what was seen in the September quarter this fiscal and 55 per cent lower than the levels in December quarter last fiscal, the report said. Both public and private sector companies held back from investing in new projects during the December quarter this fiscal.
Public sector companies announced fresh investments to the tune of Rs 50,604 crore in December quarter, the lowest since December 2004. This is 37 per cent lower than the fresh value of fresh investments in September quarter of FY19 and 41 per cent lower than that in December quarter of FY18.
The private firms fared worse with value of projects in December quarter tanking 62 per cent in comparison to the previous quarter and 64 per cent as against the corresponding period in the last fiscal.
According to the report, India Inc decided to hold fresh investments in the past quarter considering the continued trouble of bad loans, growing policy uncertainties before the 2019 Lok Sabha elections and rising value of stalled projects. The report showed that the value of stalled projects increased marginally even though the rate of stalling remained unchanged in the December quarter.
The rate of stalling in private sector inched closer to its all-time high of 24 per cent. On the other hand, public sector projects saw a marginal improvement in the stalling rates, which kept the overall levels a little above 11 per cent.
Power and manufacturing sectors remained the worst-hit due to stalled projects in the December quarter, with the former accounted for 35.4 per cent of all stalled projects, whereas the latter made up 29.4 per cent of the same.
Lack of funds, problems with procuring fuel and raw materials and unfavourable market conditions remained the biggest reasons behind stalling, the report said. Lack of funds remained another major reason, indicating that underfinanced banks and corporations are finding it tough to finance their ongoing projects.
Edited by Vivek Punj