Chennai: State-level investor meets helped India witness its second-best quarterly new investment announcements worth Rs 11.5 trillion in the March quarter of FY24.
The new investment announcements of Rs 11.5 trillion in Q4 was much higher than Rs. 5.2 trillion in Q3 FY2024. This was mainly supported by a few state investor meets held in Tamil Nadu, Odisha, Gujarat and Goa in Jan 2024, which together saw investment proposals amounting to Rs. 9.5 trillion.
However, the aggregate new proposals during Feb-Mar 2024 slowed to Rs. 2 trillion, suggesting some transient caution amid the onset of the Model Code. The momentum is likely to remain subdued in the Election quarter of Q1 FY2025, based on the historical trends.
After peaking at Rs 39.1 trillion in FY2023, the value of new investment projects declined sharply to Rs. 27.4 trillion in FY2024, while exceeding the average annual cost of Rs 19.5 trillion, that was seen during FY 2015-2022.
The number of newly-announced projects dipped to an 18-year low 3,183 in FY2024 against 5,897 in FY2023, even as the average ticket size of new project announcements rose to an all-time high of Rs. 8.6 billion in FY 2024, 30 per cent higher than the average cost of Rs. 6.6 billion seen in FY2023.
ICRA expects private capex to gain momentum only in the second half of FY2025, after the Parliamentary Elections are completed and the monsoon season ends. The Centre and states’ capex growth is budgeted to moderate sharply in FY2025 against that seen during FY 2022-24, which could have a bearing on investment demand in the ongoing fiscal.
The capital expenditure by the Centre and 26 states recorded a healthy growth of 36.5 per cent and 26.8 per cent in 11M FY2024. However, the Interim Budget estimates for FY2025 reveal a moderation in the expansion in capex for both the Centre and states vis-Ã -vis the pace seen in the last three years, which will have a bearing on investment demand in the ongoing fiscal.
