Cen­tre’s share of project an­nounce­ments lower than that of states so far this fis­cal

Mint ST - - POL­ICY - BY SACHIN P. MAM­PATTA sachin.m@livemint.com MUM­BAI

In­dian states have col­lec­tively an­nounced more new projects than the Union gov­ern­ment in the April-septem­ber pe­riod this year, data from the capex-track­ing database of the Cen­tre for Mon­i­tor­ing In­dian Econ­omy (CMIE) shows.

At a time when In­dia’s growth en­gine is slow­ing, the bur­den of driv­ing pub­lic in­vest­ments and growth seems to have fallen on the shoul­ders of state govern­ments, as the cen­tre has slowed down spend­ing on cap­i­tal ex­pen­di­ture (bit.ly/2yr­jrhh).

New project an­nounce­ments by state govern­ments (taken to­gether) and the cen­tral gov­ern­ment have fallen this year but the fall has been sharper in case of the cen­tral gov­ern­ment, with new project an­nounce­ments falling by as much as 74% com­pared to the year-ago pe­riod. As a re­sult, the share of state govern­ments in new project an­nounce­ments has in­creased from 39% in the first half of 2016-17 to 63% in the first half of this fis­cal year. See Chart 1 The cen­tre’s share of projects un­der im­ple­men­ta­tion is still higher than that of the states at 57.8% but even this share might fall in the com­ing quar­ters given its dry­ing pipe­line of new project an­nounce­ments.

It is worth not­ing that not all new project an­nounce­ments are ini­ti­ated or com­pleted: some are junked at an early stage for var­i­ous regulatory road­blocks or other rea­sons, while oth­ers can get stalled even af­ter they have been started. None­the­less, the an­nounce­ments of new projects serve as a lead in­di­ca­tor for ac­tual in­vest­ments.

So far this year, Ut­tar Pradesh has led states in new project an­nounce­ments. It ac­counted for 11.85% of new state projects so far this fis­cal. Kar­nataka, Tamil Nadu, and Ma­ha­rash­tra are the other states which have large capex plans this year.

In terms of projects un­der im­ple­men­ta­tion, Ma­ha­rash­tra leads the pack, ac­count­ing for 15% of all state gov­ern­ment projects un­der im­ple­men­ta­tion. Te­lan­gana and Kar­nataka fol­low close be­hind, with each hav­ing a share of 11% in projects un­der im­ple­men­ta­tion.

The fall in pub­lic in­vest­ments this year would have been sharper had it not been for th­ese states. As early as 2014, the chief eco­nomic ad­viser to the fi­nance min­istry, Arvind Subra­ma­nian had ar­gued that pub­lic in­vest­ments should drive In­dia’s capex cy­cle (bit.ly/2yfwqsu). But over the past few quar­ters, new pub­lic project an­nounce- ments have been muted even as project an­nounce­ments by the pri­vate sec­tor have dried up. As fis­cal space for states shrink (bit.ly/2pukjpd), state govern­ments may cut back on their capex plans, fur­ther dent­ing the capex cy­cle.

See Chart 2

The only silver lin­ing is that the stalling rates in pub­lic sec­tor projects have de­clined marginally un­like in the case of the pri­vate sec­tor (bit.ly/2yd5xwe), where stalling rates have spiked up. More than a fifth of pri­vate sec­tor projects are stalled but the stalling rate is less than 10% for pub­lic sec­tor projects, CMIE data shows.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.