State and central government new project announcements fell 27 per cent year-on-year, and 47 per cent sequentially to ₹1.3 trillion. Private sector new project announcements fell 2 per cent compared with the September quarter last year, and 49 per cent compared with the June quarter to ₹8.8 trillion.
Numbers are higher year-on-year for the first half of the ongoing financial year (FY27), largely driven by a spike in the June quarter, which saw nearly ₹20 trillion pledged in new announcements.
New projects indicate an intention to invest, and actual investments may vary. But it provides a broad idea of future trends.
Government and private capital expenditure is closely tracked as they can be a key driver of economic growth.
The factors affecting private investment may be more global in nature in the immediate future, suggested Madhavi Arora, chief economist at Emkay Global.
“There is some geopolitical uncertainty, the cost of capital globally has been going up and raw material or input costs have also risen,” she said.
The September numbers come on the back of some resilience and even an uptick in new project announcements in the June quarter. Demand destruction due to the Iran war and the consequent surge in energy costs was staved off by oil marketing companies and the government absorbing higher crude prices, according to Arora. There was also some tailwind due to lower goods and services tax. Bank funding has become cheaper than non-bank funding, she added, and credit growth shows companies are increasingly tapping banks for financing their needs. Key sectors to watch include power, semiconductors, electric vehicles, metals and mining, and real estate according to Arora.
The Union budget in February had raised capex spending by 9 per cent to ₹12.2 trillion
“The government will meet its targets,” said Bank of Baroda chief economist Madan Sabnavis. The private sector momentum may well continue, though it is likely to be concentrated in a few sectors related to infrastructure expenditure and heavy industries, he added.
State governments had been slow to spend their capex allotments, according to Comptroller and Auditor General of India (CAG) data, Business Standard had reported earlier.
The manufacturing sector showed a decline of 32 per cent year-on-year in the September quarter. Construction and real estate was down over 21 per cent in the same period. Mining, electricity and services all showed higher new project announcements.
The Reserve Bank of India (RBI) September monthly bulletin estimated a healthy double-digit growth in private capex for FY27.
“The predominance of greenfield investments in the project pipeline reflects ongoing capacity expansion and confidence in the medium-term growth outlook,” it said. Capacity utilisation remained above the 75-per cent mark, according to the RBI’s quarterly Order Books, Inventories, and Capacity Utilisation Survey.
