India’s infrastructure woes are likely to worsen as nearly 75 percent of central infrastructure projects are either delayed or yet to give a definite timeline for completion.
That’s according to a report by CARE Ratings that’s compiled data provided by the Ministry of Statistics and Programme Implementation.
While the number of projects under implementation has grown sharply over the years—from 571 in April 2012 to 1,304 in January 2018—so has the number of projects without a conclusive timeline—from 132 in April 2012 to 721 in January this year. The number of delayed projects has, however, declined to 262 earlier this year from 317 in April last year.
The reasons for the postponement include delays in land acquisition, getting environmental clearance, financing, tendering and law and order issues. Besides, lack of infrastructure and linkages, changes in scope and geography also led to the implementation lag, the ratings agency said.
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The anticipated cost for completion of planned projects has ballooned to Rs 18.38 lakh crore, from an original outlay of Rs 16.22 lakh crore, after the latest evaluation by the ratings agency. That’s primarily due to the original cost being underestimated, escalation in environmental safeguarding, land acquisition and change in the scope of projects, the report said.
The completion of these projects is likely to be in focus, ahead of the general election next year and elections in key states. States like Rajasthan, Madhya Pradesh, Chhattisgarh, Maharashtra, Uttar Pradesh and Bihar are expected to witness higher project completion by March 2019 as they together account for over a third of the projects in pipeline, the report said.
While the government has undertaken steps to reduce time and cost overruns by setting up online monitoring systems and standing committees in the ministries concerned, there are demands that are yet to be met with, CARE Ratings noted. “There’s been a long-standing demand for setting up an agency for approvals and streamlining processes like land acquisition and tendering of public infrastructure projects.”
According to the report, the bulk of these projects that are in sectors such as roads and highways, railways, power and coal will require a higher annual outlay to meet the remaining costs to be incurred. That’s because additional efforts are required to make up for the coal sector facing a shortfall in capacity and railways and power dealing with network congestions.
“The costs to be incurred on railways, road, power, petroleum and urban development sectors account for 85 percent of the total original costs,” CARE Ratings said.
Among the costs already incurred, cumulative expenditure in the power sector has been the highest so far, with close to Rs 2.25 lakh crore spent in implementing sector-specific projects. The roads, highways and transport sector has seen the lowest expenditure incurred, the ratings agency added.