Stalled projects: Fresh investments in India plunge to a 13-year low as stalled projects rise

[Barun]

Fresh investments in India plunge to a 13-year low as stalled projects rise

Low capacity utilisation, high levels of leverage, and a clogged pipeline of stalled projects have fettered the animal spirits of Indian industry. Land related problems account for 11% of the affected projects, while the biggest reasons for stalling are lack of clearances (environmental clearances and others). The power sector accounted for 40.6% of all stalled projects while manufacturing accounted for 28.4%of such projects.

Sachin P. Mampatta, Mint, Wed, Jan 03 2018.

New project announcements by Indian companies touched a 13-year low of Rs77,000 crore in the December quarter, the project-tracking database of the Centre for Monitoring Indian Economy (CMIE) shows.

The latest numbers suggest that the investment cycle in India is unlikely to witness a turnaround anytime soon. This means that it may take longer than expected for India’s growth engine to roar back to life. CMIE’s capital expenditure database is the most widely tracked one in India, and the data on new project announcements serves as a lead indicator for the economy.

The data shows that the value of new projects more than halved in the December quarter compared to the year-ago period. Compared to the preceding quarter, the three months ended December saw a 33% decline in the value of new project announcements. The last time project announcements reached such a low was in 2004.

The manufacturing sector has seen the sharpest fall in new project announcements. The only silver lining in the data was a sharp uptick in power projects, thanks largely to a Rs1,000 crore renewable power project in Andhra Pradesh and a Rs9,000 crore gas-based power project in Punjab.

The analysis and data are at this link.

http://www.livemint.com/Industry/FjKp7NoIlo0HI43J8HnLEO/Fresh-investments-in-India-plunge-to-a-13year-low-as-stalle.html