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economy | IST

Drop in new investments to 14-year lows due to lack of demand, and not funds: CMIE

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The Centre for Monitoring Indian Economy (CMIE)'s latest data suggested that new investments in the country plunged to a 14-year low in the December quarter. Mahesh Vyas, MD & CEO of CMIE, spoke to CNBC-TV18 about what led to the sequential decline in capex.

The Centre for Monitoring Indian Economy (CMIE)'s latest data suggested that new investments in the country plunged to a 14-year low in the December quarter. Mahesh Vyas, MD & CEO of CMIE, spoke to CNBC-TV18 about what led to the sequential decline in capex.
“The numbers at macro level for investments are sobering so we see new investment projects being announced falling and this is not a plunge, it is not a sharp decline but it is a part of steady decline that has been happening for the last three-and-a-half year,” Vyas said on Thursday.
Vyas said that the economy was seeing a decline in both new projects and revival of old projects.
According to him,"Rate of stalled projects continue to be high."
Talking about reasons for this drought, Vyas said, “It is not a financing problem and that is clearly ruled out. We even asked entrepreneurs questions as to why a project is stalled etc. and the only people who say financing is a problem are those people who are actually not bankable.”
“The expectation of capacity utilization rising, what we saw in Order Books, Inventories and Capacity Utilisation Survey (OBICUS) in June ’18, has actually come down again. So the problem is more to do with demand,” said Vyas.
On the growth front, he said, “The larger companies are doing well and the existing companies are doing well but new ones are not coming in. There are sectors where you will not see big investments like power, will not see big investments. There is a very good ramp up in investments in the road sector and that has continued which will show up in the balance sheets of implementing companies.”