June turns quieter as animal spirits fade
While the June quarter is often a quieter period, new government capital expenditure (capex) announcements were the lowest this year in at least a decade.
According to data from the Centre for Monitoring Indian Economy's (CMIE) project-tracking database, new projects worth ₹4.1 trillion were announced across the country during the first quarter of the current fiscal. This marks one of the lowest investment proposals since the first three quarters of 2020-21 (amid pandemic lockdowns) and the first quarter of 2024-25 (during general elections).
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'There is usually a seasonal dip observed in project announcements in the June quarter after the ramp-up in March. But this year the decline was unusually sharp," said Aditi Nayar, chief economist at Icra Ltd.
A sharp decline in government projects, accounting for only 13% of overall new investments, primarily drove the slowdown in the recently concluded June quarter. Government investments totalled a mere ₹0.5 trillion, marking the lowest for a June quarter in at least a decade. This figure was even lower than public sector projects announced during April-June 2020, when the country had undergone an unprecedented lockdown due to the Covid-19 pandemic.
According to Icra's Nayar, the notable decline in Q1FY26's new projects should be read carefully, as it follows the unusual spike in Q4FY25 of worth ₹6.8 trillion, which was more than double the year-ago levels and also exceeded the amounts seen in the rest of 2024-25 together.
Also Read: Public capex is doing the heavy lifting, and the figures aim at a decade's high
'The chunking up of such announcements in Q4FY25 is likely to have led to the lull in Q1FY26," she added.
Private sector investments, at ₹3.5 trillion, though accounting for the bulk of new project announcements in Q1FY26, still hit a four-quarter low. Among the 10 largest new project announcements in the June quarter—which collectively represented approximately 67% of total investments—only one was government-funded: the Chandrapura Ultra Supercritical Power Plant Expansion Project worth ₹0.2 trillion in Giridih, Jharkhand.
Vedanta's Dhenkalan Aluminium Smelter Project led new investments in Q1FY26 at ₹1.3 trillion, followed by InterGlobe's purchase of 30 more Airbus A350-900 aircraft valued at ₹0.4 trillion.
Sector-wise analysis reveals that manufacturing primarily dominated new investments in the quarter, accounting for more than half of all announcements, yet investments in this segment remained at a near two-year low.
Also Read: Sixteenth Finance Commission likely to keep states' tax share unchanged amid Centre's defence, capex needs
Despite the subdued pace of new investment announcements in Q1FY26, project completions showed relative strength, with projects worth ₹2 trillion completed during the quarter, marginally lower than projects worth ₹2.4 trillion completed in the previous quarter.
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