Private sector projects slow down, power and mining show strong growth

While the country saw an overall growth of around 22.7 percent in new project announcements in the fourth quarter of the fiscal year 2024-25 (Q4FY25), the growth in the private sector was not as much as expected. Private investment is still quite subdued due to economic uncertainty, weak consumer demand and global geopolitical tensions.

The report said that total new project announcements in both the public and private sectors reached Tk 18 lakh crore in Q4FY25. But the growth rate in the private sector was only 4 percent. More worryingly, there was a 9 percent decline in private project announcements for the entire fiscal year FY25, while the total announcements stood at Tk 27 lakh crore.

The decline is due to a significant decline in project announcements in the services sector and construction and real estate sectors. The 18 percent decline in new project announcements in the services sector, and a higher decline in the construction sector, are the two sectors that have hit private capital investment in FY25.

 However, the Manufacturing sector has seen a mixed picture – while there has been an overall decline of 5 per cent, there has been a significant increase in sectors such as textiles, food and agro-processing, metals, transport equipment etc.

The private sector has also been weak in terms of project completions. In Q4FY25, private project completions fell by 41 per cent to just Tk 96,500 crore. This decline is 31 per cent for FY25, while the total project completions in FY24 were Tk 3.6 lakh crore, which came down to Tk 2.5 lakh crore in FY25.

However, it is not all doom and gloom. Investment in power and renewable energy has increased by 55 per cent to Tk 5.6 lakh crore. More surprisingly, investment in mining has increased by 732 per cent to Tk 2,500 crore, compared to Tk 300 crore the previous year.

 Analysts believe that the threat of reintroduction of Trump-era tariffs and the fear of increasing imports from China are creating instability in global trade, which has weighed on investor confidence. As a result, many companies are postponing or reducing their capital expenditure (capex) plans.

Overall, the report shows that while some sectors have turned around, private capital investment in India still faces major challenges. Economists believe that this stagnation will be difficult to overcome until weak domestic demand and global uncertainties are resolved.

While the trend of increasing investment in the public sector is encouraging, it is now the government's responsibility to accelerate private investment through necessary strategic interventions.