DNA Money Edit: Politics of infra projects ahead of polls

Launch of new infrastructure projects comes to a grinding halt every time the country goes to polls. As the general elections are round the corner, industrial activities will remain subdued primarily because of muted domestic demand and the uncertainty over the outcome of Lok Sabha elections. 

As the government and the funding agencies focus more on the under-construction projects in sectors like roads, irrigation, airports, seaports, new projects get pushed away. In fact, even investors in the infrastructure space are going to stay away from committing to new projects for want of more clarity and will prefer to do a wait-and-watch until the new government is in office.

As per a report by Dun & Bradstreet, concerns about the government curtailing its investment due to a significant shortfall in tax collections against the target are expected to keep the industrial activity subdued in the near term.

According to the government data, industrial output growth dropped to a 17-month low of 0.5% in November on account of contraction in the manufacturing sector, particularly consumer and capital goods. 

Everyone expects it to improve to 1.5-2% in December. It is vital for the country to clock faster economic growth too.