Investment in new projects hit 15-year low

According to the data collected by the Centre for Monitoring Indian Economy (CMIE), investment in new projects hit a 15-year low in the quarter ending in June 2019.

New projects worth ₹43,400 crore were announced by Indian companies, across both private and public sectors, in the June 2019 quarter, which is 87% lower than what was announced in the same period a year ago, and 81% lower than what was announced in the March 2019 quarter.

The sudden drop in project announcements is due to a downfall in private and government investments both.

There was a fall of 77%  in investment made in new public sector projects compared to the previous quarter and 84% from what was announced in the same period last year. Similarly, investments in new private sector projects saw a downfall of 83% when compared to the March 2019 quarter and 89% when compared to the same period a year ago.

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A sharp fall was seen in investments in the manufacturing sector as well as the services sector. While there was a 75% fall compared to the previous quarter and 68% compared to the same period a year ago in the manufacturing sector, it was 94% compared to the previous quarter and 98% compared to the same period a year ago in the services sector.

The stalling rate of projects has also reached another height in this quarter. The stalling rate of private sector projects reached 26.1%, an all-time high, in the June quarter. The stalling rate of the manufacturing sector was calculated to be 27.2% , it turned out to be 20.4% for the power sector. These two sectors along with the service sector lead to 92% of the total stalled projects.

Livemint reported that the major reason for stalled projects is lack of funds. Along with it, it also listed problems with fuel and raw materials and delays in land acquisition as other reasons for stalled projects.