Lumbering Along

Despite the headline-grabbing announcement of major infrastructure initiatives, a report by Dolat Analysis & Research Themes seems to suggest that the government’s new investment in infrastructure projects has been declining over the past few years. New investments have declined by 40.6% YoY in December 2017 and 27% YTD in FY18. New investments in the current fiscal have fallen to Rs.8.4 trillion, owing to the fall in railways, irrigation and road projects, which has been partially offset by a rise in real estate investment. In fact, this is the straight fifth consecutive month of decline by 40.6% YoY to Rs.759 billion in December. 

Despite the decline, roads continue to the biggest infrastructure segment, accounting for 21% of the total new investments announced YTD, followed by real estate at 10%. In terms of geographic allocation, Maharashtra has seen the maximum, cornering 22.9% of the total investment followed by Madhya Pradesh (6.3%) and Andhra Pradesh (6.1%). The Centre has announced notable infra projects, for example, projects such as Gundugolanu-Devarapalli-Kovvuru (Rs.1,530 crore), Dwarka Expressway (Rs.1,210 crore); Light Metro Rail (Vijayawada) (Rs.5,500 crore) to name a few. The fate of most ongoing projects now hinges a lot on the budgetary allocation that the government is able to provide in the upcoming Union Budget.