Fresh investment intents attracted by states recorded a slump of 27.8 per cent to Rs 1.33 trillion in the April-June quarter of this fiscal. In the comparable period of 2017-18, investment intents were valued at Rs 1.70 billion.
The quantum of investment proposals filed also declined from 543 to 460 in the period under review, data by the Department of Industrial Policy & Promotion (DIPP) showed. The average investment per proposal fell eight per cent to Rs 2.89 billion from Rs 3.14 billion.
Gujarat continues to be the top state in drawing investments followed by Rajasthan and Punjab. Between them, the top three states had nearly 65 per cent share of the overall investment intents.
Investment proposals are considered to be a key barometer of economic resurgence. However, going by the slack progress in fresh investment proposals received by states, the pick-up in economy still seems sluggish.
Overall investments have been stressed in the last three years with the gross fixed capital formation rate standing at 28.5 per cent.
"Investment intentions so far appear to be lower than last year which can be a worry if persists", a report by ratings agency CARE Ratings said.
Sector-wise, chemicals had the highest share of virgin investments at 25.4 per cent followed by fuels (20.1 per cent) and paper (15.7 per cent).
While the picture on domestic investments looks grim, FDI (foreign direct investment) flows have been positive with an increase of 22 per cent during April-June from $10.4 billion to $12.7 billion. "This is even more significant because this comes at a time when there was apprehension on how the foreign funds would behave considering that the FPI had turned negative on news of the Fed increasing rates and growth returning to the western economies. However, the fact that FDI has increased vindicates the faith in the Indian economy", the CARE Ratings report adds.
Exports have shown a pick-up, growing 14.2 per cent during April-July. If the tempo sustains, FY19 could end with aggregate exports of $330-340 billion. But, imports have risen by a sharper rate of 17.1 per cent, driven by crude oil. Non-oil imports, too, have inched up at 7.38 per cent.