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Demonetisation hits new investments: CMIE

Demonetisation hits new investments: CMIE

According to CMIE data, it was low compared to the average Rs 2.36 lakh crore worth of new investments seen per quarter in the preceding nine quarters of the Modi government. The data suggests that demonetisation has hit the pace of announcement of new investment proposals during the quarter.

New investment projects have fallen sharply to Rs 1.25 lakh crore during the quarter ended December 2016.

According to CMIE data, it was low compared to the average Rs 2.36 lakh crore worth of new investments seen per quarter in the preceding nine quarters of the Modi government.The data suggests that demonetisation has hit the pace of announcement of new investment proposals during the quarter.

Some 227 new investment proposals worth Rs 81,800 crore were announced during this quarter till November 8. In comparison, only 177 investment proposals worth Rs 43,700 crore were made between November 9 and December 31, 2016.

The fall in investment proposals becomes more apparent when these values were adjusted for the number of days in each period. "The quarter consisted of 39 days before demonetisation and 53 days, after. Evidently, the quarter had more days in the post-demonetisation period and yet, the investment during this period was lesser than in the shorter pre-demonetisation period," said a CMIE analysis.

New investments worth Rs 2,097 crore were announced, on an average, per day during the 39 pre-demonetisation days from October 1 through November 8. According to CMIE data, this average dropped sharply by 61 per cent to Rs 824 crore during the 53 post-demonetisation period. The number of projects announced per day dropped from 6 to 3 by a similar comparison.CMIE estimated that if the pre-demonetisation rate of new investment proposals had continued during the post-demonetisation period, the quarter could have ended with new investment proposals worth Rs 1.89 lakh crore.


This would still be lower than in the preceding quarter (Rs 1.94 lakh crore) or the average new investment proposals worth Rs 2.36 lakh crore since the establishment of the Modi government. New investments, therefore, had slowed during recent quarters and, demonetisation has further slowed their pace.The slowdown in new investment proposals is stark in terms of the number of new proposals.

According to the data, only 404 new investment proposals were observed during the quarter ended December 2016. This is the lowest number of new projects announced in a quarter in over a decade.

The number of new projects had dropped to below-500 for the first time in a decade during the September 2016 quarter. On an average 7-8 projects are announced per day. Post-demonetisation fall in this average to just 3 projects per day reflects a new level of anxiety on the investment front.

Published on: Jan 04, 2017, 8:06 PM IST
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