Construction Mirror Article detail

Within three months of assuming office, the Narendra Modi 3.0 government has unveiled infrastructure projects worth Rs 3.31 lakh crore. Not just the Cabinet approvals, the actual spending on core sector projects has also picked up. In July the capital expenditure was almost double of May and June, which were the peak election months.

The biggest focus area is the road sector, including expressways or rural roads. The new tenure has also brought in a change in approach to the infrastructure with regard to other areas like railways and hydro power.

However, private sector participation continues to be low in key areas like highways and railways, while there has been pick-up in public private partnership projects in seaport sector. The government avers the pace of infrastructure creation won’t be slowed due to financing constraints. While reliance on Budget funds is high and rising, efforts are being made to mitigate the burden on the exchequer via monetisation of brownfield assets –operational highway stretches and railway stations, land parcels etc This strategy appears to be more rewarding in the highway sector where both the toll-operate-transfer and the InvIT routes being employed with vigor to raise resources via monetisation.

Still, analysts see early signs of a slowdown in infrastructure investments, and stress the need to bring in more private funds and global patient capital.

“Generally, Q2 is a lean quarter in terms of construction activity because of the monsoon, and hence the ramp-up in execution is expected from Q3 onwards. Construction entities catering to all major sub-sectors like road, railway, airport, metro, drinking and sewage water related projects are expected to benefit from government’s thrust on improving infrastructure,” said Ashish Modani, senior vice president at Icra