Manufacturing investment gestation rate rises to 5-year peak

Taking stock

- SACHIN P MAMPATTA

A key metric that measures the efficiency with which manufacturing projects are completed is at its best in half a decade. The rate of gestation is a measure of time efficiency in completing manufacturing projects relative to its cost, as defined by the Centre for Monitoring Indian Economy (CMIE).

It is the time taken (in months) for completion from announcement, divided by the cost of the project in billion rupees (₹1 billion is ₹100 crore). (If a project is worth ₹350 crore and the number of months taken is 22, then it is 22 divided by 3.5.)

Lower numbers indicate greater efficiency in putting money to work. The rate of gestation for 2024-25 (FY25) was 9.17 months per ₹100 crore in project expenditure. It was worse (10.33) in 2018-19. The present number is also better than the 12.58 months seen in the previous two years (chart 1).