Modi Diktat Paying Off: India Infrastructure Projects on a Roll
(Bloomberg) -- Prime Minister Narendra Modi’s efforts to push delayed infrastructure projects are paying off.
About a quarter of 1,201 projects valued at 16.9 trillion rupees ($262 billion) were delayed as of January, down from 43 percent two years back, according to a government report seen by Bloomberg News.
Cost overruns have also come down to 11 percent from 20 percent from March 2015. Of the total projects -- each worth at least 1.5 billion rupees -- 329 are running behind schedule, 293 have cost overruns, while 95 have both time and cost overrun compared to their original implementation schedules.
Since coming to power in May 2014, Modi has been reviewing infrastructure projects, setting targets for ministries, taking steps to ease bottlenecks and encouraging overseas companies to set up factories.
Still, projects from sectors including coal, power, petroleum, railways and road have been running behind schedule, primarily because of a delay in attracting finance, land acquisition and environmental clearances and a lack of infrastructure support and linkages.
As the government implemented initiatives such as the delegation of decision-making power, setting deadlines and reforming contract rules, the stalled public projects stared moving, said Manish Agarwal, Leader, Capital Projects & Infrastructure, PricewaterhouseCoopers India. "Government intentions have translated into reality."
The government is focusing on an "increase in public spending, completion of stalled projects rather than the announcement of new projects, the resolution of private stalled projects and bringing new projects into the market for private investment,” said Agarwal.
With the government’s recent steps to reduce non-performing assets of banks, there will be some increase in private investment, said Agarwal.
In the latest review meeting on April 26, Modi called for a consolidated approach to existing projects.
India needs $646 billion investment in the next five years to meet its infrastructure demand, Finance Minister Arun Jaitley said in April.