New project announcements slumped in September 2012 quarter: CMIE

MUMBAI: New investment announcements fell to a 33-quarter low of Rs 58,494 crore in September 2012 quarter, the Centre for Monitoring Indian Economy ( CMIE) has said.

Net investment announcements by the private sector at Rs 35,368 crore and by the government at Rs 23,126 crore were the lowest since September 2004 quarter, CMIE said in a monthly review.

Barring Kerala, Punjab and Himachal Pradesh, investment announcements during the April-September period this year remained substantially lower than the average in the last four quarters, CMIE said.

All industries with the exception of steel, electricity distribution and road transport saw a sharp fall in new investment announcements.

New investment announcements have been falling for the past three years. The prime reason was huge pipeline of projects since 2004-05 when the capex boom started.

From Rs 3 lakh crore in 2003-04, new announcements peaked at Rs 22.6 lakh crore in 2008-09. Promoters went slow there onwards, and announcement fell gradually to Rs 16.6 lakh crore in 2009-10, Rs 15.08 lakh crore in 2010-11, Rs 10.3 lakh crore in 2011-12 and further to Rs 3 lakh crore in the first half of 2012-13, according to CMIE.

However, the fall in September 2012 quarter was exceptionally steep. This could be a blip as investors are suspected to have followed a wait-and-watch policy because of the political instability, the economic think tank said.

Achieving the levels seen two-three years ago looks close to impossible considering that many large industries are currently running at more than comfortable capacity utilisation and also have huge capacity additions in the pipeline, it said.