In the three months ending September, the private sector has announced lower investments in new factories, plants, and other new projects.
According to data released by the project tracker centre for tracking the Indian economy on Sunday, the total value of new project announcements from the private sector was Rs 0.8 trillion. This is a 79.2 per cent decline from the Rs 3.8 trillion in new projects announced in the same period last year. It has fallen 85 per cent from the Rs 5.3 trillion worth of new projects announced in June.
The government's new project announcements, which typically include roads and other public infrastructure, are down 72.5 percent year-on-year to Rs 0.4 trillion in September 2023. In September 2022, it was 1.4 trillion rupees, and in June it was 1.2 trillion rupees.
Lower tax collections were expected to affect government spending, according to a report from Nomura from the global financial services group Nomura, authored by research analysts Nathan Sribalasundaram, Aurodeep Nandi and Sonal Varma. The fiscal deficit target for financial year 2023-24 has been more challenging to achieve, he said. The government spends more than its earnings and is called a fiscal deficit. It is measured relative to economic size as given by the gross domestic product. The effect of both revenue expenditure, dealing with salaries and other recurring payments, and capital expenditure, which involves investments in long-term assets like roads, would be felt. The Capex slowdown is expected to take effect in the second half of the current financial year.