Investment intentions up, but too early to term upturn: Care Ratings

MUMBAI: The prospects of better than average monsoons this year has resulted in an improved outlook for the economy. Now there are some green shoots visible with early signs of recovery in the investment climate. But this is not yet well spread and is concentrated in specific industries and states, warns a report by ratings firm Care.

The data for the first half of the year indicates that there has been an improvement in investment intentions with 18.7 per cent increase in the number of proposals.

Proposed investment is however marginally higher by 1.3 per cent while the employment associated with these proposals is higher by 37.3 per cent. These proposals include those under IEM (Industrial Entrepreneur Memorandum), LOI (Letter of intent) and DIL (Direct Industrial Licensing).

Electrical equipment and textiles account for the majority of investment intentions accounting for more than a third of investment intentions both this year as well as last year.

State-wise analysis shows that Gujarat and Karnataka are the leading states in both the years to attract investment proposals with Maharashtra and Chattisgarh featuring in the list of top states to attract investments.

Andhra Pradesh is one of the top five in 2016 which may be attributable to the new development plan being implemented post bifurcation of the state. States rich in minerals/metals would continue to witness higher investment due to availability of opportunity.

The report goes on to clarify that this has to become more pervasive before it may be concluded that the cycle has turned. The decline in dropped projects and an improvement in the implementation to intentions ratios in the context of industrial entrepreneur memorandum or IEMs are two positives that would need to be closely monitored, Care said.