NEW DELHI: The share of the private sector in new investment announcements rose to a multi-decadal high of 87% in the three months to June this year, data from Centre for Monitoring Indian Economy (CMIE) showed. In fact, the private share in new projects in the quarter was the highest since the CMIE started giving out such data in 2010.
But this still would not mean an overall rebound in investments or capital asset creation – the private sector share jumped primarily because government investments plunged headlong in the period.
The value of new investments – government and private combined – rose 43% on year to Rs 4.1 lakh crore in the quarter, on a low base caused by the election-season slump in the year ago period. Except for Q1FY25, the absolute value of investments in Q1FY26 was still the lowest among several of recent quarters (see chart).
The year-on-year rise in private investments announced in April-June (Q1FY26) was a whopping 151%, again largely a statistical bump caused by a low base.
Value of new projects announced contracted 81% sequentially in Q1FY26. Typically investment declarations in the final quarter of a fiscal is roughly three or four multiples of those in other quarters.
To be sure, new projects announced had touched an all-time high of Rs 21.8 trillion in January-March (Q4FY25) on the back of robust private sector projects of Rs 15 lakh crore.
A sakuatry aspect is that “projects completed” rose 174% on-year in Q1FY26, after four straight quarters of contraction, indicating an improvement in activity on the ground, and also a flurry of formal announcements of commissioning of projects after the election phase got over.
Projects worth Rs 2 lakh crore got completed in the three months to June this year as compared with Rs 0.7 lakh crore in the same quarter last year. The private sector announced new projects worth Rs 3.6 lakh crore in the three months to June this year as compared with Rs 1.4 lakh crore in the same quarter last year. Gaura Sengupta, chief economist, IDFC FIRST Bank, says the increase in private capex has come on very weak Q1FY25, hence the year on year growth rate looks high. “Other high frequencies continue to indicate that private corporate capex remains tentative due to demand uncertainty,” she says.
New projects announced by the government in the three months to June contracted 63% to Rs 0.5 lakh crore, the lowest since June 2020, indicating that the government is going slow on capital expenditure.
Source: The Financial Express
