Good days are far away: New investment projects in India remain in a slump

The percentage of indicators of rural and urban consumption showing acceleration has fallen in recent months | Image: iSTOCK
New investment project announcements have declined continuously in the last four years to Rs 9.76 trillion in FY19 from Rs 20.86 trillion in FY15. While there has been an increase in announcements in FY19 to Rs 17.25 trillion from Rs 12.16 trillion in FY18, the moot point is that the number of projects announced has slowed down during the last couple of years. Moreover, a majority of them are in areas such as transport services, mainly driven by the government. Share of the private sector investment has increased to 66 per cent in FY19 from 44 per cent in FY15.

Not only is the investment demand slowing down but consumption demand is also showing signs of moderation as revealed by various leading indicators. The leading indicators, when grouped into rural andurban consumption, reveal a serious slowdown in both areas. The percentage of indicators of rural and urban consumption showing acceleration has fallen in recent months – to 30 in February 2019 from 50 in January 2019 in the case of rural; and to 25 from 38 in the case of urban consumption demand.