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Fresh investments in infra sector in September lowest yet in FY 2019-20

Share of tenders floated for buildings and housing fell by 10 percentage points to 20% in September.

The infrastructure sector is not out of the woods yet. The sector saw fresh investments of only around Rs 30,000 crore in September, which is the lowest in the financial year 2019-20. Fresh investments in September were down nearly 68% from a year ago.

Investment announcements have declined since June. Between July and September of the financial year 2019-20, fresh investment announcements stood at Rs 1.8 lakh crore, which is the lowest compared with the second quarter of the previous two financial years. Of these, the share of fresh investments into roads declined by two percentage points from a year ago to 11%, while share of new investments into railways fell to 2%.

Industry analysts observed that fresh investments into the manufacturing sector saw the steepest decline of Rs 38,800 crore from a year ago to Rs 3,300 crore. Meanwhile, 37% of new investments announcements in September were in the power and mining sectors, according to a report by a domestic research and advisory firm.

Tender activity also declined. Tenders worth Rs 50,000 crore were floated in September 2019 compared with Rs 60,000 crore worth of tenders floated a year ago. Total tenders worth Rs 1.3 lakh crore were floated in the second quarter of 2019. Share of tenders floated for buildings and housing fell by 10 percentage points to 20% in September.

However, project award activity has picked up marginally. According to analysts, it is expected to gain more steam on the back of sharp increase in ordering commencing by December end. Projects worth nearly Rs 20,000 crore were awarded in September. Projects awarded in September, while lower than the 24-month average of Rs 30,000 crore, were highest in the last nine-month period. The National Highway Authority of India (NHAI) intends to award projects covering around Rs 6,000 km in the current financial year. Of this, projects covering 1,500 km has been awarded so far, the report said.

Source: Financial Express