According to a report by Nirmal Bang Institutional Equities, the total capital expenditure announced by the private sector and central and state governments in India from April to September witnessed a significant decline of 32% compared to the corresponding period in the previous year. The decrease in capital expenditure was attributed to a 21% drop in announcements by the central government and a nearly 34% reduction in announcements by the private sector.
In the first half of the financial year, the private sector was at the forefront in announcing capital expenditure of Rs 6.11 lakh crore, followed by the central government with Rs 1.86 lakh crore, and state governments with Rs 65,300 crore. The share of the private sector in the total capital expenditure announcements stood at 71%, slightly lower than the 73.4% share witnessed in the same period last year. Excluding air transport, the private sector's capital expenditure announcements showed an increase of 18% year-on-year from Rs 5.1 lakh crore.
The capital expenditure announcements were diversified across various sectors with renewable energy accounting for 17% of the total projects in terms of value, housing sector at 14%, and chemical sector at 13%. Notably, the automobile sector witnessed an all-time high of 12% capital expenditure announcements. The report also highlighted that housing projects in metropolitan and tier-I cities saw a peak in announcements due to the real estate upcycle, focusing on the luxury and upscale segments. While central government capital expenditure announcements decreased by 21.4% year-on-year, the National Highways Authority of India stood out with a remarkable 174% growth in announcements. On the other hand, railway projects saw a significant 88.5% decline in announcements, and renewable energy projects were minimal, indicating a challenging period for these sectors.