Covid-19 wave hits new infra projects in India in December quarter

New infrastructure projects in India saw a drop of 6.3% in the December quarter compared to the September quarter in 2021. The value of new projects in the just-ended quarter was Rs 2.1 trillion, as per the data from the Centre for Monitoring Indian Economy (CMIE), which was lower than the Rs 2.2 trillion witnessed in the September quarter. However, it is higher than Rs 1.5 trillion registered for the quarter ended December 2020, the first year of the Covid-19 pandemic. This data links with the November data for core sector development, an index of eight core industries, which expanded at its slowest speed since early 2021. It increased by 3.1% in November. Cement output decreased over the previous year. Other industries covered in the index, like crude oil, coal, fertilizers, natural gas, steel, refinery products and electricity, registered a slowdown blocking fertilizers. It is because rabi crop sowing was presently underway, according to experts. The value of completed projects increased for the second quarter in a row to Rs 1.4 trillion from Rs 1.15 trillion. The pace moving forward is anticipated to be closely watched amid surging cases of the Omicron variant of the coronavirus. Firms typically fund developing new capacities when present production capacity is anticipated to fall short. Such investments had taken a back seat amid declining demand due to the pandemic. The prior wave in the early part of 2020 had a significant effect on capacity usage. Reserve Bank of India’s periodic Order Books, Inventories and Capacity Utilisation Survey (OBICUS) for the June 2021 quarter said that due to the second wave of Covid-19 pandemic, certain restrictions were inflicted in many areas of the nation, which adversely impacted capacity utilisation (CU) in the Indian production sector; the effect was, however, less severe than that observed during Q 2020-21 in the wake of lockdowns and other constraints during the first wave. Image Source Also read: Omicron variant hits global supply chain