The 70th Survey of projex in India conducted by Projects Today indicates revival in private projex, albeit at a slower pace. The survey also indicated slight slowdown in government announcements of new projects.
Despite the slowdown seen in announcement of fresh investment, the public sector still accounted for 73 percent of the total fresh investment announced during FY18.
Notwithstanding the fall in fresh investment announcement in the last quarter of FY18, fresh projex from the private sector increased by 11.5 percent.
These are the key findings of the 70th Survey of Projects Investment in India.
New Investment Announcement
Despite the disruptions and confusions caused by the big ticket reform, GST adopted in July 2017, the fresh projex announced during the financial year 01 April 2017 – 31 March 2018 (FY18) remained at the previous year’s level. The 12-month period ended 31 March 2018, saw announcement of 9,610 new projects entailing a total investment of Rs 11,77,602 crore. A year ago, the country had seen announcement of 10410 new projects worth Rs.11,81,310 crore.
The ownership wise bifurcation of the fresh investment emanated in FY18 indicates slowdown in the public sector announcement of new projects and the private sector showing signs of revival in their projex activities.
A 10.9 percent fall in total fresh projex announced by the Central government agencies saw the overall growth rate of the government sector decreasing by 5 percent. In all, the public sector announced 7,777 new projects worth Rs 7,95,338 crore. The biggest fall was witnessed in the Railways sector.
On the other hand, fresh projex from the private sector, despite slowdown in the last quarter of FY18, managed to register a Y-o-Y growth of 11.1 percent. During the 12 months ended 31 March 2018, private promoters announced 1,833 projects worth Rs 3,82,264 crore.
The growth in fresh investment was seen across all major sectors except Power. While the last fiscal saw private developers shifting their focus from thermal power projects to non-conventional power projects, the current year saw private developers distancing themselves from both sub-sectors. While scores of thermal power projects announced in the earlier years are yet to move from the planning stage to under-execution stage, the falling tariff rates and imposition of import duties on solar power equipment forced private players to go slow on taking up new solar power projects.
The welcome feature observed in the Survey, is increased participation of private players in Roadways projects.
Sectoral Distribution of Fresh Projex
Barring Infrastructure (Social and Transport) and Irrigation, other major sectors like Manufacturing, Mining and Electricity saw negative growth in fresh projex.
While the fall in fresh investment in the Manufacturing sector (-7.15 percent) and Mining (-5.37 percent) was moderate, the fall in the Electricity sector was sharper at -24.59 percent.
In the Manufacturing sector, sub-sectors like Metals, Electrical Machinery and Automobiles received higher fresh investment vis-a-vis the preceding fiscal. On the other hand, key sectors like textiles, pharma, food processing and cement received lower new projex.
The private sector, which was the leading investor in the Electricity sector, announced less projex both in the Conventional and Non-Conventional power sectors. While availability of coal, land and finance was the main problem developers faced in executing thermal power projects, the recent fall in tariff rates and increase in import duties on key equipment made private developers to shy away from announcing new Solar projects.
A couple of mega projects in the Mining sector, including the Rs 10,300 crore lime mining project of Dalmia Bharat, fresh investment announced in the mining sector during FY18 fell short of such investments announced in FY17 by 5.37 percent.
The Services & Utilities sector (Socio and Transport infrastructure), largely led by the Central and state government agencies attracted higher new investment proposals in FY18 too. But for the sharp fall in fresh projex in the Railways sector (from Rs.2,11,482 crore (287 projects) to Rs 73,979 crore (94 projects), fresh investment in this sector would have been higher.
Among the other sub-sectors, Roadways was in the forefront with 3,000 new projects worth Rs 3,29,345 crore. NHAI was active throughout the year and announced around 400 new highways projects entailing a total projex of Rs 1,71,015.27 crore. Of this, 86 projects were offered on EPC basis and 81 on HAM basis. Further, during FY18, NHAI handed over 18 highway projects to private developers.
Other than NHAI, the National Highways & Infrastructure Devp Corpn (118 projects worth Rs 46,696.2 crore) and the Public Works Department, Maharashtra (225 projects worth Rs 34,442.28 crore) were the large investors during FY18.
Shipping Infrastructure attracted around Rs 50,445 crore fresh investment in FY18. This included projex proposals from both private and public sectors. Adani Hazira Ports is planning to expand the outer harbour at Hazira at a cost of Rs 14,030 crore, Essar Ports intends to set up a commercial port at Dwarka at a cost of Rs 10,000 crore and the Central government-owned V O Chidambarnar Port Trust is developing Tuticorin harbour basis at Rs 6,312 crore.
During FY18, around 28 Smart Cities announced their new investment plans. These cities will spend around Rs 13,997.39 crore in executing a number of projects over the next couple of years.
Hospitals, Tourism, Industrial Parks were other sectors which received increased fresh projex during FY18. The private sector, too, was seen investing increasingly in these sectors.
Geographical Distribution of Fresh Investment
Among the states, Maharashtra continued as the most favoured destination in attracting fresh investment for the second year in continuation. The state attracted 1,403 new projects entailing a total investment of Rs 1,49,900 crore in FY18. However, compared with the previous fiscal’s projex statistics this indicated a fall of 23.76 percent.
Odisha replaced Andhra Pradesh from the second position by bagging 393 new projects worth Rs 1,09,021 crore. These include a super mega steel project worth Rs 55,000 crore of JSW.
While Andhra Pradesh with 557 projects worth Rs 96,787 crore had to be satisfied with the third position, Gujarat retained its fourth position with 684 new proposals entailing a total projex of Rs 85,200 crore. Rajasthan with Rs 74,522 crore worth projex improved its ranking significantly from 8th position in FY17 to 5th rank in FY18.
The top five states together accounted for 44 percent of the total fresh projex announced in FY18.