The pandemic and ensuing lockdown halted economic activity during fiscal 2021. This pushed new investments to an 18-year low of Rs 4.57 lakh crore, during the period. According to CMIE data, these are significantly lower than Rs 16.04 lakh crore worth of new projects proposed in 2019-20 and new investments of approximately Rs 15 lakh crore announced in the preceding two years. These are expected to be revised upwards in the coming quarters and are estimated to settle at Rs 7 lakh crore for the year.
That said, government-led new investment projects saw a massive decline of 82 per cent against an 18 per cent growth in FY20. Private sector projects continued to fall at a steeper pace-it declined 1.7 per cent and 61.2 per cent, respectively, in the past two fiscals.
Project completions too were hit as the year saw 54.3 per cent less executions compared to a fall of 20 per cent in the previous year.
Meanwhile, there was some respite in the quarterly numbers. New investment proposals worth Rs.1.2 lakh crore were made during the quarter ended March 2021 which showed a sequential improvement of 13.4 per cent. New project announcements dropped 24.3 per cent, quarter-on-quarter in the December quarter. Yet, compared to the year-ago period, fresh investments were down 69.4 per cent but were lower than the year-on-year contraction of 85 per cent in the previous quarter.
According to CMIE, "Such early estimates always undergo substantial revisions for about a year. But the first estimates made immediately after end of the quarter are also quite indicative. They provide a quick sense of the orders of magnitude and the direction of investments. The broad takeaway from the quarter ended March 2021 is that new investments continue to remain abysmally low, but they are looking up."