The government's move to withdraw Rs 500 and Rs 1,000 bank notes from the financial system has hit new investment proposals across the country, according to data collected by independent think-tank Centre For Monitoring Indian Economy Pvt Ltd.
The third quarter of the current financial year saw new investment proposals worth Rs 1.25 lakh crore, lower than the level seen over the last few quarters. The average value of quarterly investments during the Narendra Modi regime stood at Rs 2.36 lakh crore, Mahesh Vyas, chief executive officer of CMIE wrote on the think-tank's website.
The number of new investments proposals fell to 404 during the quarter - the lowest in a decade, Vyas added. This was the second consecutive quarter when the number of new projects announced fell below 500.
The quarter ended December 2016 had seen 227 new investment proposals worth Rs 81,800 crore till November 8, the day Prime Minister Modi announced the demonetisation exercise.
Following the announcements, investment proposals for the rest of the quarter declined to 177 proposals worth Rs 43,700 crore, the report added.
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 investments during this period was lesser than in the shorter pre-demonetisation period.CMIE Report
Also Read: Life After Demonetisation: Taking Stock Of The Economy
The report stated that new investments had already slowed during the recent quarters and demonetisation further slowed down their pace.
CMIE estimates that the value of new investment proposals would've stood at Rs 1.89 lakh crore, had investments continued at the same pace as they were before demonetisation. This figure is lower than that of the previous quarter at Rs 1.94 lakh crore, and much lower than the Rs 2.36 lakh crore average in the Modi government.
With the average number of projects after demonetisation falling to 3 per day from 7-8 per day, CMIE said, that a new level of anxiety on the investment front is being reflected.
Evidently, uncertainties caused by demonetisation have played a role in the fall in the flow of investments. The investments climate has been weak for some time. This is now expected to remain weak for some more time.CMIE Report
In a separate report, CMIE also found that the implementation of projects worth Rs 77,700 crore was stalled during the December quarter. The value was 38 percent higher than the value of projects stalled in the previous quarter.
Demonetisation has increased uncertainties in the economy and these could become a new cause for projects getting stalled. During the quarter ended December 2016, six of the 22 projects stalled mentioned lack of promoter interest or unfavourable market conditions as the reason for stalling implementation. These two reasons are quite similar and essentially indicate an adverse business environment.CMIE Report
Also Read: India's Manufacturing Gauge Contracts For The First Time In 11 Months
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
