The manufacturing sector has witnessed a significant upturn in new project announcements, reaching Rs 6.2 lakh crore in FY22, marking a substantial increase of 93.75% compared to the Rs 3.2 lakh crore recorded in FY20, according to a study by the Bank of Baroda (BoB). This positive trend has been particularly prominent in machinery, chemicals, and textiles. However, the study notes that the services and construction sectors are still grappling with losses incurred during the various waves of the Covid-19 pandemic, as new project announcements in these sectors remain below their pre-pandemic levels.
Sonal Badhan, an economist at BoB, highlighted the fluctuations in the manufacturing sector, stating that new project announcements had declined to 17.8% in FY20 but surged to 38.3% in FY21 and further increased to 43.5% in FY22. The FY22 figures represent the highest since FY05, potentially attributed to the manufacturing sector facing comparatively lesser impact from subsequent waves of the Covid-19 pandemic compared to the services sector.
The study also delves into the trajectory of new projects announced by non-financial companies, encompassing manufacturing, mining, electricity, non-financial services, and construction & real estate. It reveals a nearly sevenfold increase from Rs 4.1 lakh crore in FY96 to Rs 26.7 lakh crore in FY09. However, subsequent new project announcements have not surpassed this peak, reaching Rs 23.7 lakh crore by FY16. Despite a recovery to Rs 14.3 lakh crore in FY22 from the low of Rs 8.4 lakh crore in FY21, the figure remains below the pre-pandemic level of Rs 18 lakh crore in FY20 and the levels observed in FY15/16. The study emphasizes that the cost of new projects announced averaged Rs 17.5 lakh crore between FY17 and FY20.
