Investments remain flat; slight rise seen in govt spend: CMIE


Investments in India have neither grown nor deteriorated in orders in the quarter gone by, says a report by the Centre for Monitoring Indian Economy Pvt Ltd. (CMIE). The investment situation is stagnant, Mahesh Vyas, MD & CEO of CMIE told CNBC-TV18. The number of implementation projects getting stalled has been falling. Stalling of projects have declined by 73 percent year-on-year in September quarter. The overall environment is not good enough to offset these projects getting stalled, Vyas says. The data also indicated government investment inching up slightly over private investment. “We have got Rs 1.9 trillion of new investment projects being proposed and we’ve got half a trillion which got stalled,” he adds. Below is the verbatim transcript of Mahesh Vyas’ interview to Ekta Batra and Prashant Nair on CNBC-TV18. Prashant: In your assessment, from the reports that you have put out what is the most significant takeaway as far as investments — new and old — are concerned? A: That is a very challenging question because there is nothing very prominent in the data this time. So the data is a lot more stable, so doesn’t have any spike of any kind. It doesn’t have a headline making story to it. So what we see is what we have seen in the recent past, which is a continuation of the slowdown in investments and there isn’t any further deterioration from where we were and there isn’t any improvement from where we were. So the story remains more or less the same as it has been in the recent past. Ekta: Stalled projects as a percentage of projects has risen a tad bit, can you put that into context for us? A: Let us look at the numbers in a little more detail and we will start off with the implementation stalled numbers. So we see this time that there has been a small increase in the projects that were stalled during its implementation period but still this number is small compared to what we saw in the last two years. So implementation, projects getting stalled is a regular phenomenon, this happens every quarter but what is important is that this number has been falling. So there is too much emphasis that has gone into saying that projects are still getting stalled although they are under implementation. But I don’t think we should emphasize too much on this number. Particularly, this time, of the top three projects that got stalled and this is in terms of value of projects, two of them are in Kashmir. So the situation in Kashmir has impacted and has led to this increase in the projects stalled under implementation both of them are transportation projects, one is the tunnel and the other is a rail line from Udhampur to Srinagar to further south. So there is a Kashmir impact on the numbers that you do see. There are other projects, which have got stalled as well and at least two major ones seem to be because of environmental clearances so the National Green Tribunal (NGT) has put a stay on one project and there is another project, which ran into trouble because of new guidelines. So the overall investment environment is not good enough to offset these projects getting stalled. Prashant: From the projects which are coming in — new investments at least announcements being made — there was a lot of bullishness about the fact that the government was continuing to be a big spender, are we seeing that in the latest data that you have put out? A: No, there isn’t much of a story in the sectors because the numbers have dropped so low that one-two projects can say the whole story for example, just two projects in Kashmir seem to be dominating the story of stalled projects. So, I don’t think we have got enough data to draw inferences to say this sector or that sector in this quarter has done something better or worse than the other. The story in government and private usually is they both go up and down together. So when the investments fall, they fall in government and private but there is a small change in the relative share and when there is a slowdown, the share of government goes up and even now the share of government seems to be inching up little bit. However, these differences between private and government used to be larger earlier, they seem to be narrowing down now. So it is all a story of shrinking of the story and when you compare it to the historical past, one doesn’t see as much of noise to be able to tease out a story from this. All one can say is that it is all quiet on the investment front.