Fresh investments up by 37% in 2008-09: Survey
April 10, 2009: Despite the industrial slowdown in the second half of 2008-09 fiscal, there has been an overall rise of 37.4 per cent in terms of fresh investment and 29 per cent in terms of number of projects as compared to last year.
As of 31 March 2009, there were 29,628 projects worth Rs 42,35,484 crore as compared to 22,883 projects worth Rs 30,83,264 crore on 31 March 2008.
These are some of the offtakes of a recent survey carried out by ProjectsToday.com, a leading database on project investment, across 29,628 projects entailing a total investment of Rs 42,35,484 crore (approx. US $850 billion).
Reflecting the global economic crisis, which broke out around June 2008 in the USA and hit the Indian shores in the second half of the fiscal 2008-09, projects investment activities in India declined sharply since September 2008.
Compared to 7,112 new projects worth Rs 5,78,912 crore announced in the first half of 2008-09, only 5,421 new projects worth Rs 2,83,722 crore were announced in the second half, indicating a sharp fall of 23.8 per cent in terms of number and a whopping 51 per cent in envisaged investment, according to the survey.
While fall in investment intensions was observed in both public as well as private sectors. The intensity of decay was more clear in the private sector, it said.
The impact of the global meltdown with ripple effects felt in the domestic markets was so great on the private sector, as it depended largely on external funds to execute high ticket projects that during the second half of the fiscal 2008-09, both number of new projects and investment envisaged therein slumped by 62 per cent. This was made worse by 34.4 per cent drop in fresh public sector projects.
"Expecting a faster resumption of investment activities from Indian private promoters at this point of time would be a far-fetched expectation. However, a stable and investor-friendly government in the Centre, further fall in lending rates and a good monsoon would definitely spur the private investors to scale up their investment activities, say by the third or fourth quarter of the current fiscal," said Shashikant Hegde, CEO of ProjectsToday.com.
The infrastructure sector meanwhile continued to be the key growth driver with a share of 36.1 per cent in total investment. Compared with a year ago statistics, its share in total investment increased by around 1.5 percentage point.
However, holdups in execution of proposed projects pulled down the implementation ratio from 44.5 per cent in March 2008 to 42.1 per cent in March 2009, according to ProjectsToday study.
Though the private sector had shown increased interest in participating in India's infrastructure building process, the share of public sector in this sector remained very high at 71 per cent with bulk of its investment concentrating in building roads, laying railway lines and putting in place systems for providing potable water.
According to ProjectsToday, the Electricity sector while maintaining its share at around 31.5 per cent for the last two years saw improvement in project implementation ratio from 35.3 per cent to 37.1 per cent.
Despite handsome growth in outstanding projects investment, states like Andhra Pradesh, Gujarat and Orissa could not dislodge Maharashtra from its premium position.
As of 31 March 2009, the state with 5,981 projects entailing a total investment of Rs 4,83,348 crore cornered 11.4 per cent of the total investment planned in India.
Apart from enjoying the top rank in terms of projects investment the state also has a steady and above all-India average projects implementation ratio.
Published in Business Standard date 10 April 2009