Advise Caution When Reading Uptick In New Investment Projects, CMIE’s Mahesh Vyas Says
One should wait and watch to understand direction of capex cycle as “revival is still six quarters away”, CMIE’s Mahesh Vyas says.
Centre of Monitoring the Indian Economy’s Mahesh Vyas has advised caution while reading into the uptick in new investment projects.
Aggregate capital expenditure in new investment projects announced soared to Rs 4.28 lakh crore in the quarter ended December, compared to Rs 1.5 lakh crore in the previous quarter, according to data shared by CMIE.
The surge was driven solely by InterGlobe Aviation Ltd.’s aircraft order worth Rs 2.3 lakh crore and Reliance Industries Ltd.'s Rs 70,000 crore expansion plan for its Jamnagar refinery in Gujarat, CMIE said.
“IndiGo in the past announced purchase of 250 aircraft but later put it on hold,” Vyas, managing director at CMIE, said, adding that one should wait and watch to understand the direction of the capex cycle. “The revival is still six quarters away.”
While 2020 is expected to be a sluggish year, an uptick in capacity utilisation levels cannot be ruled out, he said.
While the value of completed projects and revived projects saw a modest rise, the value of implementation stalled projects fell in the December quarter.
- The value of projects completed in the December quarter rose to Rs 1.36 lakh crore in the October-December period from 0.79 lakh crore in the preceding quarter.
- Stalled projects stood at Rs 0.6 lakh crore from Rs 0.4 lakh crore in the same duration.
- Revived projects rose to Rs 0.8 lakh crore in December from Rs 0.5 lakh crore in September.
- Projects on which work begun but was stalled during the quarter, fell to Rs 0.13 lakh crore in December from Rs 0.74 lakh crore in September.
WATCH | CMIE’s Mahesh Vyas says capex revival at least six quarters away