Chhattisgarh and Tamil Nadu top Projecx new investment table in Q2FY21

Chattisgarh topped the table by attracting fresh investment of Rs 35,771.3 cr in the form of 114 projects while Tamil Nadu was ranked second with 132 new projects worth Rs 23,331.85 cr

Among major states, Chhattisgarh and Tamil Nadu have topped the table when it comes to attracting new investments overtaking Maharashtra, Gujarat, Karnataka and others.

According to Projecx Survey data, across the states during July-September 2020 period (Q2FY21) fresh investment proposals increased by 67.2 percent in terms of new projects and by 107.1 percent in terms of projects investment on Q-o-Q basis.

In all, 2,219 new projects entailing a total investment of Rs 2,19,170.1 crore were announced during this quarter.

In the preceding quarter, i.e. April-June 2020 (Q1FY21), the country had seen announcement of 1,327 new projects worth Rs 1,05,817.9 crore. On a Y-o-Y basis, fresh investment during Q2FY21 registered a fall of 11.32 percent. In the first quarter of FY21, such decrease was a steep 72.6 percent.

Chattisgarh topped the table by attracting fresh investment of Rs 35,771.3 crore in the form of 114 projects. Tamil Nadu ranked second with 132 new projects worth Rs 23,331.85 crore. The third ranked state, Karnataka, attracted Rs 19,958.9 crore with the highest number of new projects, 287. Gujarat and Maharashtra followed the leaders with fresh investments of Rs 15,532.1 crore and Rs 15,004 crore respectively.

The Rs 22,653 crore Bodhghat Irrigation project and a couple of mining projects worth Rs 8,197 crore by South Eastern Coalfields helped Chhattisgarh top the investment table in Q2/FY, while a couple of data centre projects and a solar cell & modules project helped Tamil Nadu to be the second preferred state of project promoters, Karnataka state benefitted by a couple of high-ticket commercial complex and real estate projects and Rs 5,000 crore life science park project of KSIIDC, according to Projecx.

The increase in fresh investment proposals; increased tendering activities and a sharp jump in the number of finalised project contracts in Q2/FY21 vis-à-vis the preceding quarter do indicate a bounce back in projects investment activities in India. However, it would be too early to proclaim the return of normalcy in projects investment, according to the survey.

The Rs 83,608 crore fresh private investment seen in Q2FY21 was far less than the average quarterly fresh investment of Rs 1,69,000 crore and Rs 1,32,000 crore seen in FY19 and FY20 respectively.

The project implementation ratio (projects investment under execution as percentage of total outstanding investment) improved by a tad, from 37.0 percent in Q1FY21 to 37.53 percent in Q2FY21.

This indicates that at ground level, project execution has not gained much traction in the second quarter. The pain issues like scarcity of labour, supply chain disruption and liquidity persisted in Q2FY21 too.

Though on its part the Central government is doing its best to prop up the sagging economy through various reform measures, it will take a while for actual projects investment to gain pace at ground level. Till that time, the onus of keeping the Projex cycle moving will be on the Central government, which has to step up its infrastructure spending and rope in private promoters in sectors like roadways, railways and construction.

This move will not only help in increasing employment opportunities, but would also lay the ground for attracting increased investment from Indian and foreign companies.

Among the major sectors, drugs & pharma, healthcare, roadways, e-commerce and social infrastructure will see increased investment in coming months. Sectors like automobiles, steel, cement and capital goods will wait for revival in overall demand before chalking out fresh investment plans.

Currently, hard-hit sectors like construction, tourism and aviation will need handholding from the government for posting some sort of recovery in H2FY21.

While the good monsoon and increase in agri procurement prices have raised the hope of demand revival in coming quarters, early containment of the Covid-19 pandemic, complete unlocking of the economy and increased government spending will nudge the economy back to the high growth orbit, according to Projecx.