The Indian Industry went into a prolonged phase of Policy & Project Paralysis as the Congress Government got itself into defensive mood to defend itself against the massive Scams [2G Spectrum Scam, Common Wealth Games, Coal Scam, etc] with absolutely ZERO attentiosn towards Governance and Progressive Reforms. Industrial CAPEX Data released by CMIE March 2014 shows that investment for the quarter was lackluster, with average four quarterly new starts at Rs967bn (-10% qoq / -14% yoy). This capex slowdown is in line with the weakness seen over the past 12 quarters and as we expected given the upcoming national elections. We expect activity to be slow in the quarter ending June 2014 as well and improve only gradually. Government capex fell sequentially (-11%) after increasing over the last two quarters. Private capex showed no signs of revival. The decline was driven off continuing weak activity, particularly in the transport and mining segments.
Stalled projects as a percentage of total outstanding remained at elevated levels of ~5%. Given our expectations of a (more…)