The value of new investment projects announced declined marginally by 6% year-on-year to Rs 10.2 lakh crore in the September quarter, even as the private sector held its share at a remarkably high rate of 87% in the first half of the current fiscal year, according to data from the Centre for Monitoring of Indian Economy.
The decline in project value in Q2FY27 was on a low base (-3.1%); on a sequential basis, the fall was a sharper 48.5%. Coupled with this, a jump in the value of stalled projects (591% and 287% in Q1 and Q2 respectively) indicates a slowing of the investmet tempo and discounts the optimism about the new capex cycle which private sector is supposed to anchor.
Yet, thanks to a buoyancy seen in Q1, project intents rose 33% year-on-year to Rs 30 lakh crore during the first half of the current financial year, as compared with Rs 22 lakh crore during the same period last financial year. While private sector projects announced rose 56% on year to Rs 26 lakh crore, government projects contracted 33% to around Rs 4 lakh crore in the first half of the current financial year.
Gross fixed capital formation (GFCF), a proxy for investment, grew 11.9% in April-June, as per the GDP data. This was the highest rise in GFCF in the new GDP series going back to FY23. GFCF growth has been accelerating for four consecutive quarters.
In the just-concluded quarter, both government and private investment announcements declined by 26.7% and 5.9%, respectively. To be sure, in absolute terms, the value of private projects unveiled was Rs 8.8 lakh crore in Q2FY27, after rising to a five-quarter high of Rs 17.3 lakh crore in the June quarter. In contrast, government investment announced was Rs 1.3 lakh crore, a 12-quarter low.
Sequentially, the value of new projects halved in the September quarter after growing 52% in the June quarter. Sequentially, both government and private projects contracted by 47% and 49%, respectively.
Gaura Sengupta, chief economist at IDFC FIRST Bank, says the slowdown in project intent is led by decline in government announcements. “The capital expenditure by the state government has slowed which may be reflected in softer new project announcements,” she says.
To be sure, the value of new projects announced had touched an all-time high of Rs 26.4 lakh crore in January-March 2025 (Q4FY25), driven by robust private sector projects of Rs 20.4 lakh crore and government projects of Rs 8.9 lakh crore.
In the just-concluded quarter, the number of new projects contracted by 31% to 1,004. In fact, in the quarter ended June, the number of new projects announced plunged to the lowest level in more than two decades, reflecting persisting investor wariness in most capital-intensive sectors other than data centres and nuclear plants.
Madan Sabnavis, chief economist at Bank of Baroda, says investment has concentrated in sectors such as IT (data centres), power and metals where investments are large. “Once companies announce them, they cannot be expected to do so every quarter. On the whole the environment is largely positive though not yet fully broad-based,” he says.
What’s worrisome is that the value of stalled projects rose in Q1 and Q2, while completed projects contracted in both quarters. Sector-wise, new projects announced in the manufacturing sector contracted for four quarters in a row. Services sector grew 55% to Rs 3.2 lakh crore in the September quarter.