Private enterprises have raised the amounts they propose to invest into projects to create new capacities to record levels. However, they are very slow in completing projects that they announced earlier. While the announcement of new projects by the private sector is rising, completion of projects by them is falling.

The private sector completed projects worth Rs.0.3 trillion during the quarter ended December 2022. In the previous quarter ended September 2022, it completed projects of the order of Rs.0.4 trillion and before that, Rs.0.7 trillion. The Rs.1.4 trillion worth of private sector completions thus far will be revised upwards as more data flows in. More projects will be completed in the last quarter of the fiscal year as well. But, completions by private sector in 2022-23 are unlikely to close over the Rs.2.6 trillion worth of completions seen in 2021-22. There is a lot in the pipeline. But, the execution has slowed down.

Before the pandemic, in 2018-19 and 2019-20, the private sector completed projects worth Rs.3 trillion in each year. The fall to Rs.1.2 trillion in 2020-21 was understandable because of the strict lockdowns in the midst of a severe pandemic. But, the recovery in 2021-22 was low at Rs.2.6 trillion. The expectation then was that private entrepreneurs would rush completion of projects to catch-up with the time lost, after restrictions were removed. But, this did not happen.

Expectations of a deluge of project completions spilled over into 2022-23. But, it does not look like completions are taking off yet.

Some of the prominent private sector projects that have been delayed substantially include the Rs.75 billion industrial park by Vivo Mobile in Uttar Pradesh and the Rs.40 billion tyres project by Apollo Tyres in Andhra Pradesh that were scheduled to be completed in March 2022; JSW Energy’s Rs.63 billion wind energy project in Tamil Nadu that was to be completed by June 2022; the Rs.100 billion Nanded City township that was to completed by September 2022.

The top 40 private sector projects that were to be completed between January and September 2022 but are still not completed involve a total investment of Rs.738 billion. This is 50 per cent of the projects completed so far in the current financial year. Many of these are unlikely to be completed during the rest of the current year.

This slowing down of project completions is yet another sign of the lack of enthusiasm in the private sector to kick-start the investments cycle in India. The nature of project completions also point towards an aversion towards riskier investments.

Of the top five projects completed by the private sector during the December 2022 quarter, four are in the transport infrastructure sector. The largest is the Rs.28.7 billion airport in north Goa. The next largest is the Rs.25 billion Suryapet-Khammam four-laning project in Telangana. Two other road projects one each in Gujarat and Madhya Pradesh feature in the top five completions. It is likely that these projects are substantially supported by government concessions and are not exactly private initiatives of capacity expansion in competitive markets.

Apparently, the little private sector investment that is happening in India is essentially based on government largesse in the form of concessions given to the private sector to implement infrastructure projects.

Infrastructure projects dominate project completions. Transport services projects which are infrastructure projects such as airports, roads, railways, ports, etc account for 56 per cent of the total projects completed in the December 2022 quarter. They accounted for 53 per cent of the projects completed in the September 2022 quarter, 37 per cent in June and 56 per cent in March 2022.

The share of manufacturing industries is low at 10-20 per cent of all project completions.

In the quarter ended December 2022, two large fertiliser renovation and modernisation projects of the public sector Hindustan Urvarak & Rasayan Ltd took the lead in completion of manufacturing projects. Both projects are located in east India one in Barauni in Bihar and the other in Sindri in Jharkhand. The two projects together account for a capital outlay of Rs.165 billion. They account for over 56 per cent of all manufacturing projects commissioned in the quarter ended December 2022.

The two large projects are among the several public sector projects that were completed during the December 2022 quarter. Public sector has taken the lead in completion as private sector has fallen back. The public sector accounts for a substantial 77 per cent of all completions. It had accounted for 71 per cent of the completions during the preceding, September 2022 quarter. This is an exceptionally high share. The share of the public sector in completion of projects in the 7 years from 2008-09 through 2014-15 was about 32 per cent. This shot up to over 50 per cent in the next 7 years, from 2015-16 through 2021-22. Now, in the first three quarters of 2022-23, this share has gone up to 63 per cent with the second and third quarters showing a share of over 70 per cent for the public sector.

All the top 10 projects completed during the December 2022 quarter were public sector projects. Except the two fertiliser projects mentioned earlier all of them were surface transport projects either railways or roadways projects.

The completion of projects is concentrated in public sector and in transport infrastructure.