The infrastructure segment is both the cause and victim of the current economic slowdown. While the slowdown began with the lacklustre growth in investments, the spiral effects have now dampened the sector further.
This is evident from the growth in gross fixed capital formation (GFCF). Centre-run schemes such as the Bharatmala helped spur the GFCF component of GDP, despite the continuing lull in private capex. From late FY16 to FY19, GFCF saw a quarterly average growth of 9.7 per cent.
This slowed to 4 per cent in the June 2019 quarter and further to just 1 per cent in the September quarter of FY20, largely due to fresh orders from the Centre coming to a standstill. Aside from funding constraints, perennial delays in ground-level execution also added to the sector’s woes.
