A plunge in prices of commodities, especially fertilisers and metals, and subdued sales have hit investment in these sectors, aiding a slide in the value of overall industrial investment proposals in 2015 to Rs 3,11,031 crore, the lowest since 2004.
However, actual industrial investments dropped marginally in 2015 to Rs 77,972 crore, compared with Rs 78,747 crore in 2014 and Rs 78,497 crore in 2013, showed the data by the Department of Industrial Policy and Promotion (DIPP).
Investment proposals in just fertilisers, chemicals and metallurgical segments saw an erosion of Rs 1,22,353 crore in 2015 from a year before, much higher than the fall of R93,996 crore in the proposal value of the entire industrial sector from Rs 4,05,027 crore in 2014. Reflecting the weak sentiments, the capital goods segment in the index of industrial production (IIP), a gauge for fixed corporate investments, rose 1.7% during the April-December period, against 5.1% a year before.
The latest DIPP data showed the number of the investment proposals rose to 1,998 in 2015 from 1,843 in the previous year.
The drop in the value of such proposals, however, stokes fresh concern that a sustained recovery in industrial production is still some distance away, despite data showing a 12.6% expansion in gross value added in manufacturing in the December quarter, compared with 9% in the previous quarter.
A senior DIPP official said excess capacity with India Inc and commodity price crash are to be blamed for the decline in investment proposals as well as actual investments. He added that at this stage it’s difficult to predict how many of these proposals will be translated into actual projects on the ground in the coming months. Industrial production growth remained subdued, at 3.1% during the April-December period, compared with 2.6% a year earlier.
Even BJP-ruled states received fewer proposals in 2015, despite a robust performance by Gujarat, which saw investment proposal value almost doubling to Rs 64,733 crore in 2015 from a year before. The value of investment proposals for Gujarat, Maharashtra, Madhya Pradesh, Chhattisgarh, Rajasthan, Goa and Haryana, which are ruled by the BJP alone, touched Rs 1,57,947 crore, almost 44% lower than a year before. This is primarily because of a 78% plunge in the value of investment proposals for Chhattisgarh from the previous year. Still, these BJP-ruled states cornered a half of such proposals in 2015, although lower than that of 70% a year earlier.
However, actual investments in the BJP-ruled states fell just 6% to Rs 48,992 crore. Maharashtra grabbed the maximum investments (Rs 18,854 crore in 2015 against Rs 6,024 crore in 2014) with Madhya Pradesh witnessed actual investments of Rs 17,277 crore last year, compared with just Rs 2,625 crore in 2014.