Investment proposals fell by 30% even before COVID-19 in 2019-20: CMIE
According to the Centre for Monitoring Indian Economy (CMIE), new investment proposals per quarter has fallen by 30 per cent in six years till before the COVID-19 pandemic in 2019-20, to ₹4.2 trillion per quarter. The CMIE said that it was against what the media says about investments increasing in the country.
New investment proposals averaged at six trillion rupees in 2014-15 and 2015-16, which fell to ₹4.8 trillion in 2016-17, and then to four trillion rupees in 2017-18. In 2018-19 and 2019-20, it was ₹4.2 trillion per quarter.
“The fall in the pandemic year was a dramatic 55 percent. New investment proposals per quarter fell to ₹1.9 trillion. The situation in the first two quarters of 2021-22 is not much better at ₹1.8 trillion per quarter,” said CMIE CEO Mahesh Vyas.
“As the data shows, new investment proposals have been falling relentlessly over the past six years. And, the new data do not show any change either. On the contrary, a slow recovery that was underway since the pandemic quarter of June 2020, seems to have lost a little momentum,” said Vyas.
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“During the quarter that ended on September 30, 2021, CMIE’s capex monitoring machinery captured 348 projects that intend to invest one trillion rupees into the creation of new productive capacities in India. While we expect these numbers to undergo substantial upward revisions in the coming months, they seem to suggest that the falling trend in new investment proposals continues unabated,” Vyas said.
Vyas said that to overcome the vitiation of comparisons because of revisions, the CMIE compares the first release of new investments in a quarter with first release made in earlier quarters. CMIE makes the first release of new investments in a quarter immediately after the completion of a quarter. “The comparison makes sense because there are large revisions after the first release,” he added.
“The first release for these two quarters was ₹1.2 trillion and ₹1.55 trillion, respectively. The small recovery in new investment announcements, seen in the March and June 2021 quarters, was not sustained in the September 2021 quarter. The momentum in the first release from ₹0.56 trillion in June 2020 through ₹1.55 trillion in June 2021, petered out in September 2021,” the CEO said.
The first release for the quarter ended September 2021 though, is much better than the release in the last three quarters, which followed the outbreak of the COVID-19 pandemic. The first release of new investment proposals was ₹0.56 trillion in the quarter ended June 2020, ₹0.59 trillion in the quarter ended September 2020, and ₹0.8 trillion in the quarter ended December 2020.
