“The private sector lost steam and the manufacturing sector, which dominated fresh capex plans in recent quarters, saw a drop in terms of project numbers as well as investments proposed” File
| Photo Credit: Reuters
Private investors turned cautious in the first quarter of 2023-24, with fresh manufacturing investment plans shrinking 17.5% year-on-year and overall project outlays rising just 4.7% to ₹3.88 lakh crore, according to Projects Today.
While the April to June period (Q1) recorded a sharp sequential decline in investment plans announced by private players — from a record high of ₹10.5 lakh crore in the previous quarter — proposed outlays by the Centre and State government did the heavy lifting.
An infographic by Projects Today representing the investment plans announced by private sectors in Quarter 1.
Sluggish private investment
An 80.9% year-on-year surge in public investments — which crossed ₹3.93 lakh crore during the quarter — brought the private sector’s share in fresh investment plans below the 50% mark for the first time after 13 quarters of dominance. The share of private investment plans in the first quarter of 2022-23 stood at 63% and had risen to 72% between January and March 2023.
While investments planned by domestic industry rose 5.55% from a year ago, foreign investors’ investment plans grew just 1.8% to a tad over ₹84,000 crore.
“The private sector lost steam and the manufacturing sector, which dominated fresh capex plans in recent quarters, saw a drop in terms of project numbers as well as investments proposed,” noted Shashikant Hegde, Projects Today director and CEO. “This quarter belonged to the government sector, with Central government projects rising over 122% to ₹1.93 lakh crore and State projects surging 53.3% to cross ₹2 lakh crore,” he said.
Better implementation needed
Despite their insipid 4.7% rise in Q1, fresh investment announcements by the private sector are expected to remain positive in the next three quarters, according to Mr. Hegde. More importantly, the project implementation ratio — that is, the translation of investment intent into money on the ground — needs to improve.
“At present, the ratio for private projects under implementation is hovering around 30.92% vis-à-vis 36.55% seen in the public sector,” he emphasised.
The bulk of private investments in Q1 were planned in sectors like food processing, electronics, automobiles, hydel and solar power, ports, real estate, and data centres. Government investment commitments, on the other hand, were largely in petrochemicals, mining, hydel power, water supply, roadways, power distribution, and industrial parks, as per Projects Today’s Investment Survey for Q1, 2023-24.
Maharashtra emerged as the top State in Q1, playing host to almost a third of the investment projects announced in terms of value, at ₹2.38 lakh crore, far ahead of Karnataka (₹81,957 crore) and Gujarat (₹74,054 crore). Uttar Pradesh, with 199 projects worth ₹48,356 crore, and Telangana, with 197 projects worth ₹48,225 crore, completed the top five States in terms of Q1 investment plans.
