Private capital bets on Indian recovery; Investment plans hit record high in 2021-22

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Gujarat, Tamil Nadu Emerge as Top Picks for Private Investment; Manufacturing recovers after years

Gujarat, Tamil Nadu Emerge as Top Picks for Private Investment; Manufacturing recovers after years

India’s private sector rebounded strongly with major new investment plans on the drawing board in 2021-22, even as total investment project announcements for the year hit a record 19.3 lakh crore, almost 78% higher than before the pandemic.

According to the latest survey by investment monitoring firm Projects Today, the private sector accounted for nearly 69% of planned investments during the year, a significant increase from pre-pandemic levels of about 49% in FY20 and just 30% in FY17 and FY18.

Despite a stated official push, public investment spending has remained subdued, particularly among states, which may prevent some of the proposed private investments from taking place.

No fewer than 4,745 new projects with a total investment commitment of ₹13,27,564 crore were announced by private actors during the year, up 144.4% from FY20 levels. Private investment plans were spread across traditional sectors and emerging industries such as green energy, electric vehicles, lithium batteries, data centers and warehousing, the survey showed.

Shashikant Hegde, Director and CEO of Projects Today, called the boost in new project announcements in FY22 a welcome development when the country desperately needed huge capital expenditures to ensure a rapid, sustained economic recovery and more job vacancies, saying that public Expenditure urgently needs to be increased.

“The worrying factor is the slow pace of government sector capital spending, particularly at the state level. If government spending on infrastructure doesn’t catch up quickly, most private mega-private projects will remain on the drawing board,” he said Peppystores.

The quarter from January to March saw a 32% increase in total investment plans sequentially with 2,467 projects valued at 5.46 lakh crore compared to 2,719 new projects valued at 4.14 lakh crore between October and December 2021.

For the full year, 10,445 projects worth 19.27 lakh crore were announced, a significant increase from the 8,551 projects worth 10.72 lakh crore in pandemic-hit FY21.

Throughout the year, Gujarat led the pack in the States in terms of widely announced overall investment plans, thanks to several mega-investment projects announced by Reliance Group, Adani Group and ArcelorMittal. The coastal state accounted for nearly 30% of private investment this year, followed by Maharashtra, Tamil Nadu, Odisha and Karnataka in overall investment plans.

However, Tamil Nadu has emerged as the second most popular destination for private investment plans. The state also attracted a large proportion of new investment in future sectors along with Gujarat, Haryana, Karnataka, Maharashtra, Telangana and Uttar Pradesh.

create hopes

Unlike in recent years, India’s manufacturing sector has attracted the highest level of new investment over the past year, with the private sector accounting for 98% of those plans, Projects Today’s survey underscored.

“In total, 2,759 new projects with a total investment of ₹8,159 crore accounted for 41.93% of the total new investments announced in 2021-22. Its share of total new investment was only 13.31% in 2019-20,” the survey found.

As many as 98 of the 299 mega-projects entailing capital expenditures of at least ₹1,000 crore were in manufacturing and accounted for expenditures in excess of ₹6,000 crore.

Irrigation was the only sector to see investment fall from £75,177bn in FY21 to just £13,223bn in FY22, also 45% below pre-COVID levels. “Financially-poor state governments appear to have held back on investment plans for new irrigation projects,” said Projects Today.

In the job-intensive construction sector, the overall picture was better, with new investments rising 34.5% in fiscal 2020 but commercial real estate projects remaining 13.5% below pre-COVID levels.

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