Earlier in May, when I had asked Sajjan Jindal, chief of JSW – the group with the best appetite for capital investment – when the private sector would begin investing, he had replied that we were poised for an imminent renewal in sentiment for private investment. Recently, Ajay Piramal, head of Piramal Group and Shriram Group, reflected that a higher GDP number would initiate private investment flow into the economy. And, the World Bank projects that gross fixed capital formation (GFCF), which indicates investment demand in the economy, will grow by 6.8 per cent in FY18 and 8.8 per cent in FY19.

However, the situation appears to be suboptimal currently. According to CMIE, announcements of new industrial and infrastructural projects remained muted in the first quarter of 2017-18. Only 448 projects were announced during the quarter. This is the lowest quarterly project announcement seen since June 2014, the time when the last capex cycle bottomed out. Further, the completion of projects has dipped over previous consecutive quarters. Lower project initiation and a falling commissioning rate will be a double whammy – the only way to change this situation is to enhance the rate of commissioning of the project pipeline and, at the same time, improve the launch of new infrastructure projects. Stalled projects have also not seen any significant resolution. Ideally, the current government is in the best position to resolve and move this rapidly. If the RBI has recognised the need to resolve the mountain of debt through insolvency resolution professionals, why not seek help in resolving stalled projects too?

Foreign funds are keen to invest in toll-operate-transfer (TOT) projects so they can realise the toll yields on completed projects. Hence, NHAI is preparing to offer such completed projects and generate liquidity. Further, the Insolvency & Bankruptcy Code will help quicker consolidation as companies find a solution for bailing out. L&T’s results also indicate that larger companies with stronger balance sheets can take on the burden of stressful financial cycles as contracting for infrastructure is essentially becoming a big boys’ game. There is a need for out-of-the-box solutions to resolve the infrastructure growth gridlock.

So, if private investment is yet to make its mark, what is keeping our engines sputtering if not humming? Public spending. Government spending grew by 13 per cent, year-on-year, in the two months April-May 2017 to touch Rs 4.6 lakh crore against Rs 2.9 lakh crore in April-May 2016. Capital expenditure for infrastructure creation and other assets rose 63 per cent in April-May to Rs 54,000 crore from Rs 33,000 crore in the same two months a year ago. With GST affecting working capital cycles, government spending will be needed to keep the economy pumped up.