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Investment announcements by India Inc in Q1FY25 were at a 20-year low of Rs 44,300 crore, according to a Bank of Baroda report.
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The report attributes the slowdown to election season, with industries likely in a wait-and-watch mode before making investment decisions.
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The manufacturing sector dominated new investment announcements, accounting for 46.4% of the total, followed by electricity and non-financial services.
According to a report by Bank of Baroda, investment announcements by India Inc in the first quarter of the fiscal year 2024-25 were at a 20-year low. The report, based on data from the Centre for Monitoring Indian Economy (CMIE), estimates that investment announcements totaled Rs 44,300 crore, a significant decline from previous years. The report suggests that election season may be a contributing factor to the slowdown, with industries hesitant to make investment decisions during this time.
The report notes that this trend is unusual, as investment announcements have historically remained strong during election seasons. The manufacturing sector was the largest contributor to new investment announcements, accounting for 46.4% of the total, followed closely by electricity and non-financial services. The construction and real estate sector saw a relatively smaller share of investment announcements.
The report suggests that a pick-up in investment announcements may be seen in the second quarter, following the announcement of the Union Budget 2024-25 on July 23. A good monsoon and steady demand during the festival season, which begins in August, may also contribute to an increase in investment announcements.
