India witnessed a decline in new investment proposal for the fourth consecutive year during 2018-19, according to a report.
A Centre for Monitoring Indian Economy (CMIE) report showed that new investment proposals declined by over 19 per cent in 2018-19 (as per revised estimates) as compared to last fiscal. In the last three fiscals, the new investment proposals reported a fall of 24 per cent, 18 per cent and 4 per cent, respectively.
The latest figures for the first quarter of 2019-20 add more grist to this mill. The new investment proposals stood at Rs 43,500 crore during April-June period, which was just 12.6 per cent of the investment made in the year-ago quarter or only 17 per cent of the average new investment proposals made during the past four quarters.
"This was the quarter when elections to the Lok Sabha were held and it was expected that during such times, new investment proposals would remain very low. The government was constrained by the Model Code of Conduct which came into force on March 10, 2019. And, the private sector would rather wait for a verdict before making any large new investment announcements," the report said.
"Yet, even if we discount for this factor, the new investment announcements during the first quarter of 2019-20 were extraordinarily low," it added.
The report added that an estimate of Rs 43,500 crore will get revised upwards. "But, it is unlikely to reach any level that could change the inference that new investments have dropped precipitously."
During the January-March quarter, the drop in new investment proposals was witnessed across both the public and private sectors. However, the decline was slightly higher in the private sector investment proposals.
Investment proposals by the public sector stood at Rs 18,400 crore, which was 16.5 per cent of the proposals made in the year-ago period.
Meanwhile, new investment proposals by the private sector reported at Rs 25,000 crore, which was just 11 per cent of what they were a year ago.
On the sectoral front, the decline in new investment proposals was seen across-the-board, while transport infrastructure sector witnessed the steepest fall.
Edited by Chitranjan Kumar