 "Infrastructure")
The government’s push for better coordination of infrastructure projects appears to be bearing fruit with project completion rates up, data indicates.
The latest figures from the Centre for Monitoring Indian Economy (CMIE) reveal a surge in the value of concluded government projects, reaching a peak in June – a record spanning over a decade. In the previous quarter, government projects worth Rs 6.9 trillion were successfully accomplished, a stark contrast from the prior high of Rs 1.5 trillion in December 2021, CMIE data shows.
The evaluation includes government-owned investment projects, providing a broad perspective on infrastructure project trends and accomplishments, as per CMIE's database. This assessment might not encompass every single project, but serves as an indicator of the infrastructure sector's trajectory.
June 2023 witnessed approximately 227 completed projects, in line with previous quarters. This suggests that the surge in project value can be attributed to large project completions rather than a broad spectrum of smaller ones (see chart 1).
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The Ministry of Statistics and Programme Implementation's monthly flash report further corroborates heightened completion rates, encompassing central sector projects worth Rs 150 crore and above. Over the last four consecutive months, the trailing 12-month value of accomplished projects exceeded Rs 3 trillion. This contrasts with the period leading up to March 2020, where it was less than half this figure, largely reflecting the pre-Covid-19 landscape.
Similarly, a study of fresh government project announcements in June 2023 unveiled Rs 1.1 trillion worth of initiatives. The comparative figures stood at Rs 1.5 trillion in March 2021, Rs 2 trillion in June 2021, and Rs 1.3 trillion in September 2021 (see chart 2).
As the 2024 Lok Sabha elections approach, substantial additions to new projects are likely, with indicators from the June quarter signalling the government's intent for fresh announcements.
As the 2024 Lok Sabha elections approach, substantial additions to new projects are likely, with indicators from the June quarter signalling the government's intent for fresh announcements.
A noteworthy upswing in government capital expenditure during the quarter ending June was documented in an August 2023 note titled “Capex Crank-up” from Crisil’s Market Intelligence & Analytics division. The government utilised 28 per cent of its capital expenditure allocations in the first quarter of FY24, predominantly channelled into road and railway sectors, it said. The focus on these sectors, which accounted for 41.6 per cent of spending from 2020 to 2022, is projected to rise to 50 per cent in 2023 and 2024, reflecting a commitment to enhance road and rail infrastructure, the note added.
Telecommunications and housing also garnered attention, as emphasised in a CMIE analysis by Manasi Swamy titled “Government Front-Loads Capex Spending”. The anticipated release of the Centre's capex loans to states is expected to drive momentum in states' capital expenditure.
A robust capex push for the remainder of the year is projected to elevate government expenditure between July and December 2023 to Rs 5.2 trillion of the Rs 10 trillion planned for 2023-24, reflecting a 66 per cent increase from the corresponding period ending December 2022.
