Gerard,
//so explain to me why the chapter is not able to provide funding for viable projects.//
The problem is very simple. Chapter can fund only if it has the money.
Last year's chapter's totalĀ budget was around 18 lakh INR and the amount of microgrants they can give for communities will be obviously limited. If someone or a community comes up with a request of few lakh INR and that too within a short period of time, they cannot support even if it follows all regulations of WMF.
For Tamil Wikipedia, chapter has always supported whenever we asked support within reasonable limits it can support. Towards 10th year celebrations of Tamil Wikipedia, they did give 22,160 INR we requested.
India has Wikimedia projects in 20 languages. Many of these languages have many projects like Wiktionary, Wikisource. So, they also need to give a reasonable share for all these projects instead of spending all in few communities.