As per government estimates for FY2025, India’s growth will plummet to 6.4 per cent from 8.2 per cent recorded in FY2024. Industrial growth is expected to dip to 6.2 per cent as against 9.5 per cent and even the service sector is likely to dip to 7.2 per cent as against 7.6 per cent. One of the factors behind this decline has been the lower than targeted spending by the Government, which has also a carry-over spending lag from FY24.

On deeper analysis, it appears that the 12 per cent decline in the first eight months of 2024-25 is primarily the result of slowdown in roads and defence spending. These two sectors constituted 40 per cent of total capex outlays. Capex on road construction has been short by 16 per cent while defence has seen a shortfall of 15 per cent. In the eight months to November 2024, there is an estimated shortfall of around `400 billion.

Only 3,100 km of roads have been awarded and the construction during the nine-month period has been 5,853 km at the rate of 21.28 km per day. Although the last quarter, as per past experience, has always led to an acceleration, this year will turn out to be quite a disappointment.

Despite the lag in capex in government spending, our public enterprises have done well as they reported 24.2 per cent increase in capex compared to the previous year, reflecting their contribution to driving economic growth and infrastructure development. By the end of November 2024, they had already achieved 57 per cent of the FY2024-25 target, with capex achievements surpassing 100 per cent and 108 per cent of estimates in FY2022-23 and FY2023-24, respectively.

Although they have been constructed at a greater pace, rural roads are facing an operations and maintenance default. It is advisable to concretise these roads so that the connectivity of rural to urban areas is more permanent in nature and not subject to the vagaries of the monsoon and floods that wipe out their source of livelihood.

The Jal Jeevan Mission has transformed rural lives – the number of water connections from 32.3 million in 2019 has reached 152.9 million connections by November 2024. Yet the failure to pay contractors is causing a lot of heartburn. The amounts are not large and the Government is unnecessarily getting a bad name. When on one hand capex spending has been inadequate, these should hardly be pending. Assam and Kerala are facing bitterness over these dues.

A new case study by Oxford’s Saïd Business School, supported by the Gates Foundation, titled From Gridlock to Growth: How Leadership Enables India’s PRAGATI Ecosystem to Power Progress,” spotlights PRAGATI (Pro-Active Governance and Timely Implementation) as a digital governance gamechanger. Since March 2015, it has expedited over 340 critical projects worth $205 billion, underscoring its pivotal role in accelerating development.

Projects included 50,000 km of National Highways and the doubling of the country’s airports. Much of the focus rested on roads, railways and power plants – core drivers of economic growth. This targeted approach resolved bottlenecks and maximised returns, with RBI and National Institute of Public Finance and Policy studies showing a GDP gain of Rs.2.5– Rs.3.5 for every rupee invested in infrastructure.

There is enough evidence to show that economic growth is tied to acceleration in investment in infrastructure, but it is equally important that we make effective use of that investment such that projects are completed and not left halfway or ’90 per cent’ complete, else the returns falter drastically.

Given the state of tardiness in project announcements, including roads and highways, the Government ought to demonstrate that PM Gati Shakti has indeed accelerated DPRs and, therefore, project execution has stepped up. The benefits from PM Gati Shakti can lead to real ‘Pragati’.

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