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The investment climate is dull
Dec 29, 2015

How dull is the investment climate in India?'s one way of gauging it.

As per the Centre for Monitoring Indian Economy (CMIE), an average of 530 projects were announced every quarter a year after the millennium. The figure went up to as much as 1,340 for the period between December 2009 and September 2011. However, the latest data indicates that the number has come down to levels of 600 for the year gone by. The number averaged to 590 for the past three years, giving an indication of how bad things have been for a while.

Speaking to the media a few weeks ago, the MD and CEO of CMIE did state that the new investments till quarter ended September came in at Rs 3.5 trillion were announced by the government and private sector. While this figure was much higher than the corresponding period of the previous year, he did state that this amount included the blip on account of a big investment show in one of the states. On excluding the same, the figures did not look very nice.

Today's chart of the day gives an indication of the trend in the new projects announced over the past fifteen years.

As you can clearly see, the situation has remained dull for a while now, with the figures being closer to the lowest points of this period.

The following chart provides the trend between who has been investing - the government or private sector. Please note that these are only quarter ended figures.

While it is expected for the government to lead the capex cycle revival in India currently, the fact of the matter is that the private sector has played a bigger role during the boom periods. With utilisation levels still far from comfortable, it does seem that the expectations from the government and its impact on India's capex revival may be a little too stretched.

Data Source:CMIE

This Chart Of The Day was published in The 5 Minute WrapUp - The Dangerous Illusion of 30-50% Returns in One Day

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