States go slow on infra spend amid fund crunch

The sharp deterioration in states’ funds due to the extended lockdown is taking a toll on government-funded infrastructure programmes, with an rising variety of tasks being placed on maintain for lack of funds.

Preliminary information from public sources and conversations with consultants and engineering firms present that many states have postponed tendering for brand new tasks up to now few months, whereas ongoing tasks are dealing with delays.

The complete variety of tasks, together with each non-public and authorities, whose implementation has been stalled, rose 32% to 1,377 within the six months ended June 30 from 1,046 within the previous six months, information from the Centre for Monitoring Indian Economy confirmed.

Project monitoring organisation Projects Today’s information confirmed new venture bulletins in electrical energy, infrastructure, irrigation, manufacturing and mining fell 75% to 1,241 tasks, valued at ₹98,000 crore, from 2,500 new tasks, valued at Rs 3.86 lakh crore a 12 months in the past.

State governments that account for greater than half of all government-funded capital expenditure within the economic system have resorted to the deepest cuts in spending.

The general capex budgeted by states rose to round Rs 5.7 lakh crore within the present fiscal from Rs 5.11 lakh crore within the earlier 12 months, in keeping with a May report by credit score scores company Icra.

Predicting a steep capex minimize by states, Icra estimated that not solely would awarding exercise fall, the receivables days would additionally lengthen, triggering a vicious cycle on the money flows of contractors.

“On the ground, we’re seeing a delay when many of the tenders that were supposed to be floated in March/April have got pushed to June/July or later, and a few of them have also been cancelled,” stated Sandeep Gulati, managing director, Egis India, an engineering firm.

“The delay is more pronounced on state-funded projects as compared to those funded by the Centre or multilateral agencies. Some states have budgetary constraints and are diverting existing funds to emergency healthcare.”