The good news is that whatever President Trump does on tariffs, contractors would feel the least impact in their business. There can be some collateral impact such as dampening of the sentiment, if they adversely affect India. Steel is likely to be one commodity that is likely to experience volatility owing to its vulnerability to the adverse impact of dumping. Meanwhile, cement is largely insulated. The financial markets, however, can cause pain to the economy in general. That said, most experts appear to be of the view that the impact would be more of a nudge than a budge. By February 2025, the expenditure on roads and highways was marginally better than the same period last year at Rs.2.33 trillion versus Rs.2.19 trillion. The railways capex was also marginally higher at Rs.1.91 trillion versus Rs.1.85 trillion during the same period last year. Capital expenditure, which was subdued during October and November 2024, skyrocketed by 4X during December 2024 over the previous two months and double of that spent in December 2023.

In Kumbh 2013, the Government generated revenues of Rs.12,000 crore on expenses of Rs.1,017 crore. Kumbh 2019 churned out a revenue of Rs.1.2 trillion on an expense of Rs.2,112 crore. This Mahakumbh in 2025, a total of Rs.7,500 crore, with Rs.5,400 crore allocated by the state government and Rs.2,100 crore from the Centre, was earmarked for development projects, including roads, flyovers and underpasses in Prayagraj to accommodate the massive congregation. The Maha Kumbh Mela had a budget of about Rs.12,670 crore, with an initial estimate of 40 crore visitors. However, the event far surpassed expectations as a staggering 65 crore devotees thronged the destination by the time the 45-day event came to an end on February 26. Uttar Pradesh Chief Minister Yogi Adityanath estimated that the Maha Kumbh Mela will add more than `3 trillion to the economy of the state. This event has helped add some notches to our GDP.

States have declared their budgets and they are ambitious. But they will have to work towards sustainability as welfare schemes have dealt a severe blow to their finances and driven some to bankruptcy.

Maharashtra, Rajasthan and Telangana have stepped up their contracts awarded. But contractors have not been paid in many states. Contractors are being hit by a double whammy; on one hand, they have to pay up for ‘being in the good books’ in advance then they spend for pre-construction and then the projects suffer delays in getting launched due to permissions and then contractors are expected to grin and bear it as payments are delayed. The entire supply chain gets affected. The contractors of Jal Jeevan Mission suffered this last year.

The Builders Association of India (BAI) and the Maharashtra State Contractor’s Association (MSCA) have stated that contractors will take legal action for the non-payment of govt dues of close to Rs.1 trillion! According to the association, the Public Works Department owes them Rs.46,000 crore, Jal Jeevan Mission Rs.18,000 crore, Rural Development Rs.8,600 crore, Irrigation Department Rs.19,700 crore and the Urban Development Rs.17,000 crore. Down South in Karnataka, consequent to a meeting with Chief Minister Siddaramaiah and Deputy Chief Minister DK Shivakumar, the President of the Karnataka State Contractors Association, R Manjunath, deescalated the situation after the state government assured him that 50 per cent of pending dues (with Rs.5,400 crore allocated by the state government and Rs.2,100 crore from the Centre) would be cleared starting in April 2025, along with a resolution of GST and Mining Development Plan (MDP) concerns.

Given that contractors are not getting paid, the scenario for quality construction seems elusive. We may get a nudge from the US instead of a budge but let’s not slide into a sludge.

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