Investments into projects to create fresh productive capacities worth Rs.3 trillion were commissioned during the quarter ended March 2024. This is the highest completion of investment projects in any quarter so far. Completions had averaged at Rs.1.7 trillion during the first three quarters of the fiscal 2023-24. The average of the past three years is not very different from this either. The quarter of March 2024 is, therefore, an almost doubling of the recent quarterly completions record.
Completion of investment projects has been on a rising trend since its fall during Covid times. This rising trend, which was initially a recovery seems to have gained momentum even after the recovery. The record completions of March 2024 are a spike on a rising trend.
Part of the spurt in completions in the latest quarter is a March effect. Most March quarters see a higher completion than seen in the preceding three quarters. It is also possible that some of this accelerated completion in the March 2024 quarter reflects the political flurry before the announcement of the Lok Sabha elections and the imposition of the model code of conduct. Yet, compared to past records, completions in March 2024 are impressive.
The smart increase in the completion of projects in the March 2024 quarter has contributed substantially to fiscal 2023-24 ending with a record Rs.8.1 trillion worth of project completions. This estimate for the year is expected to inch up further as new information flows in during the coming months. But, even at its current level, project completions in 2023-24 stands head and shoulders above the previous record.
Project completions had reached a new high of Rs.6.7 trillion in 2022-23. Before that, barring the Covid-infected 2020-21, average completion of investment projects in year was a shade below Rs.6 trillion. The increase in 2022-23 was a welcome break from a near stagnation at around Rs.6 trillion. Compared to this recent trend, the Rs.8.1 trillion completions recorded so far in 2023-24 is a significant leap.
While this sharp increase in completion of investment projects is impressive compared to the past record, it is still disappointing compared to what should have been completed. Also, most of the large projects that were completed during March 2024 were those with substantial time and cost overruns.
The largest project that was completed during the March 2024 quarter is the Kakrapar Phase 2 Atomic Power Plant of the Nuclear Power Corporation of India (NPCI). This Rs.225 billion central government project was commissioned in February 2024 after a cost escalation of Rs.195 billion and a time overrun of 123 months. The project involved setting up two units of 700 MW each in Kakrapar in Surat district of Gujarat. This is a substantial expansion of the Kakrapar atomic plant.
The second largest project commissioned was the Mumbai Trans Harbour Link that connects Sewri in Mumbai to Chirle in Navi Mumbai on the mainland. This 21 km bridge over land and sea was built at a cost of Rs.178 billion. The bridge reduces the time it takes to travel from south Mumbai to the mainland. This is one of the 140 roads projects completed during the March 2024 quarter. The total investment in all these 140 projects was Rs.766 billion.
The Delhi International Airport Expansion Phase 3A was completed by the GMR group at a cost of Rs.120 billion. The project would increase the capacity of Terminal 1 from 17 to 40 million passengers per annum and the capacity of Terminal 3 from 34 to 45 million passengers per annum. Besides, the Airport Authority of India completed projects in Trichy, Aligarh, Gwalior, Dehradun, Jabalpur, Deesa, Begumpet, Kolhapur, Mangalore, Adampur, Moradabad, Azamgarh, Dibrugarh and Kalaburagi. Airport infrastructure projects were completed by other agencies in Shravasti and Chitrakoot (both in Uttar Pradesh), Malkangiri (Odisha). Collectively, these projects involved an investment of Rs.54 billion.
Tata SIA Airlines that operates the Vistara fleet completed the delivery of the last Boeing 787-9 aircraft by March 2024. The company had placed orders for these in 2018 and delivery had commenced in 2020. The project was worth Rs.116 billion. The airline also completed acquisition of 13 A320 neo aircraft during the same period. These were worth Rs.99 billion.
Transport services infrastructure dominated the completion of projects in the quarter of March 2024. Projects worth Rs.1,313.5 billion were completed accounting for nearly 43 percent of the total completions. Roads projects dominated with completions worth Rs.766 billion followed by airways with completions adding up to investments worth Rs.390 billion. Railways projects are a distant third with completions worth Rs.133 billion. Logistics saw project completions worth Rs.14 billion and shipping worth Rs.11 billion.
The power sector contributed only Rs.531 billion or 17 percent to the total completions recorded in the March 2024 quarter. The largest power project completed was NPCI’s Rs.225 billion Kakrapar Phase 2 Atomic Power Plant in Gujarat. This was followed by Tamil Nadu Generation and Distribution Corporation’s 800 MW North Chennai Stage 3 Thermal power plant in Ennore in January 2024. The project involved an investment outlay of Rs.101 billion. Government of Andhra Pradesh commissioned Poola Subbhaiah Veligonda irrigation project worth Rs.100 billion in March 2024.
The share of manufacturing in the completion of new investment projects is very low. Manufacturing projects worth Rs.430 billion were completed during the March 2024 quarter. They accounted for a mere 14.4 percent of total completions. The largest manufacturing project completed was a copper smelting unit. Kutch Copper, an Adani group company completed a Rs.100 billion, 0.5 million tonnes per annum greenfield copper smelter in Mundra in Gujarat. The company plans to expand the capacity to one million tonne in the next phase.
