The Recession effect

The first quarter of fiscal 2009-10 ended June 2009 saw the first big impact of recession with a massive drop in fresh investments by almost 73 per cent, the Centre for Monitoring Indian Economy has said in its July edition of Monthly Review of Indian Economy. "The quarter ended June 2009 witnessed some stress on the investments front. The announcement of new investment projects fell precipitously and the announcement of projects being stalled increased dramatically during this period,"the report stated. The fall in new investment announcement was sudden and steep. Investments worth Rs 1.37 lakh crore were captured during the quarter. This is Rs 4.99 lakh cr less than investments made in the corresponding quarter last fiscal, a drop of almost 68 per cent."This is also less than a quarter of the average new investments received in the preceding four quarters. New investment announcements had peaked to an exceptionally high of Rs 8.2 lakh cr in the preceding quarter that ended in March 2009," the report observed.
New announcements have averaged between Rs 3.5 and 5.5 lakh cr in the last 10 quarters. Thus, the fall in the June 2009 quarter is as exceptional as the rise in the preceding quarter.
Implementation of 49 projects envisaged an investment of a substantiative Rs 1.2 lakh cr. This includes the Rs 30,000 cr Maha Mumbai SEZ project of Mukesh Ambani-led Reliance Industries Ltd. "The fall in new investments and the rise in projects being stalled raises fears of an abrupt halt of the investment cycle seen in the last five years. It is too early to conclude that this is indeed the case," it stated. Of greater importance is the commissioning of projects that is expected in 2009-10, the report added.