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New private project announcements zoom ahead of polls

By Sachin P Mampatta
April 09, 2024 12:20 IST
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The private sector’s new project announcements in the quarter ending March were among the highest on record.

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The value of new private sector project announcements for the three months ending March 2024 was Rs 9.8 trillion, shows data from tracker Centre for Monitoring Indian Economy (CMIE).

This is the second-highest on record in data going back to 2009.


The highest was Rs 13.8 trillion in March 2023 which had seen a large, one-time aviation order of $100 billion worth of new planes from Air India.

The current surge is driven by multiple sectors.

The total value of projects including that of the government was Rs 11. 3 trillion.

New projects refer to the construction of new factories, roads, railways and other assets created for long-term use.

New project announcements from the government too rose to Rs 1.5 trillion as of March.

This ended a three-quarter declining trend of new government projects which had seen the value of such projects decline to Rs 0.5 trillion as of December 2023.

The overall increase in new project announcements is significantly higher than what was seen around previous elections.

It is a 78 per cent increase over the median value of new project announcements seen over the previous four quarters.

The equivalent figure in March 2019 was 15 per cent and it was -18 per cent in March 2014.

Key projects which have been in the limelight in the March quarter as per reports include the laying of the foundation stone of three semiconductor facilities worth Rs 1.25 trillion, Tata Motors investing Rs 9,000 crore in Tamil Nadu for an automobile plant and Swedish defence firm Saab for a new facility under the 100 per cent foreign direct investment (FDI) route.

Manufacturing accounted for Rs 6.7 trillion in new project announcements.

It accounted for the largest share.

This was followed by electricity sector projects which accounts for another Rs 3.5 trillion.

Mining, non-financial services and construction and real estate accounted for the remainder.

The share of manufacturing in the new project mix was higher than was seen in March 2023, the previous high in terms of new project announcements.

Companies typically invest in new production facilities when existing capacity is seen to be inadequate to meet demand.

Capacity utilisation has shown hovered near the 75 per cent mark, according to the Reserve Bank of India’s Order Books, Inventories and Capacity Utilisation Survey (OBICUS) as of September 2023 (Q2:2023-24).

The data is released with a lag.

“At the aggregate level, the capacity utilisation (CU) in the manufacturing sector increased to 74.0 per cent… from 73.6 per cent in the previous quarter…

"The seasonally adjusted CU, however, declined to 74.5 per cent in Q2:2023-24 from its level of 75.4 per cent in the previous quarter,” it said.

Around Rs 3 trillion worth of projects were completed in March.This is 37 per cent more than the Rs 2.2 trillion completed during the same quarter last year.

The value of projects which were abandoned, stalled or shelved rose to Rs 1.7 trillion.

The capital expenditure trend is likely to rise in a sustained manner, according to a March 26 India Economics report from the Morgan Stanley group authored by chief Indian economist Upasana Chachra and economist Bani Gambhir.

“Private capex, which has been on a weak footing for most of last 10 years is also showing signs of recovery as government’s push for infrastructure spending is improving the business environment and crowding in private investments…Household capex, which accounts for approximately 37.6 per cent of total capex, has been recovering over the last 18-24 months with a turnaround in real estate sentiment in both the residential and commercial spaces,” it said.

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Sachin P Mampatta
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