New project announcements show a divergent trend. The private sector has been more active compared with the government in the March quarter. Due to the pre-election code of conduct kicking in, new project announcements fell 66% and 87%, respectively, when compared with the year-ago period and preceding quarter, a Citi Research report says. Worse, the measures taken by the government to hasten project completion have had little impact.

What changed for the better since December was that private project announcements jumped by 86%. In a sense, it is mirrored in the higher business confidence index.

That said, there seems to be some activity in completing existing projects. In comparison with the December quarter, the pace of completed projects under the government umbrella grew by 77%, higher than 22% for those under the private sector. Perhaps higher interest rates and cash flow pressures, which are the result of aggressive bidding and an adverse economic scenario, stymied the pace of project execution. These are unlikely to ease in the near term. The number of stalled projects remains stubbornly high, the Citi report says. In the March quarter, the number of stalled projects rose by 13% compared with the year-ago period and by 5% against the previous quarter.

Besides policy changes, attracting new investments and long-term cheap credit and effective resolution of existing disputes are some key challenges that the new government must address to restart the infrastructure and investment cycle in the country, a Barclays report says.

But it may not be up to the central government. Earlier this month, a report by JPMorgan Chase and Co. said it had looked at 50 projects to find out what was holding them up. It found that 80% of the total stalled value was because of issues that were related to the states, with land acquisition being a major factor. A quarter of the projects were stuck because they couldn’t get coal, gas and other raw materials. Even if raw materials are obtained, the mess in the power sector will require thorough reform of the state electricity sector.

“All told, the fact that most implementation bottlenecks lie within the realm of state governments over which the Centre has little leverage, and there is a significant debt overhang facing the infrastructure sector and public sector banks, suggests that expectations of a sharp and sustained pick-up appear optimistic at least in the coming quarters," the report concluded.