Investment activity in India has slowed in line with worries over the rising interest rate and high inflation.
Early data indicates that the value of completed projects declined to a seven-quarter low of ₹1.2 lakh crore in the March quarter of FY23, against ₹1.7 lakh crore in Q3 FY23, with the government continuing to dominate in completions.
The value of new projects announced had hit a new high in the quarter and was boosted largely by one big-ticket aircraft deal, said ICRA in its report.
However, the outlook for FY24 appears to be favourable, given the massive ₹10.5-lakh-crore worth central infra projects scheduled for completion during the fiscal, steep capex targets set by the Centre and state governments, and sustained buoyancy in housing demand.
The value of new investment projects announced in the March quarter surged to a record high of ₹12.4 lakh crore against ₹7.2 lakh crore in the same quarter of FY23.
However, this sharp uptick was dominated by a few big-ticket announcements such as Air India’s aircraft order (₹6.6 lakh crore), power sector projects (₹2 lakh crore), and data centres (₹64,100 crore).
The private sector continued to dominate for 10 quarters in a row in the December quarter of FY23, with its share in total proposals at a high 92 per cent.
The push to complete projects is backed by the sharp increase in government budgeted capex to support investment demand and GDP growth during the fiscal, although timely execution remains key.
The progress in projects worth ₹4.1 lakh crore seems to be healthy, with cumulative spending exceeding 80 per cent of the total anticipated completion cost as of March 2023.
Even if only these projects are completed in FY24, it would exceed the year-ago figure of ₹3.1 lakh crore by a healthy ₹1 lakh crore.
Aggregate home sales volumes in the top seven cities rose by 1.1 per cent on a sequential basis to touch a record 159.1 million sqft in Q4 FY23.
ICRA expects the home sales volumes across the top seven cities to rise by 8-10 per cent in FY24 after a sharp 29 per cent increase in FY2023, supported by adequate demand. However, the impact of rising recessionary pressures on the job market and rising interest rates on affordability remains to be seen, it added.