Way of Economic Recovery: Delays in projects are getting heavy

Economists and policymakers advocate that the path to economic recovery should be paved with increased government spending on infrastructure. The Rs 100 lakh crore infrastructure program ‘Gati Shakti Bharat Master Plan’ announced on Independence Day rests on this belief.

The assumption is that government investment in infrastructure will drive demand, job creation, income, consumption and growth.

So the question is, with what efficiency will the income taxpayers’ money be spent?

The Ministry of Statistics and Program Implementation (MoSPI) releases detailed reports every three months on the status of central sector projects costing Rs 150 crore and above.

The 887-page report for April-June 2021 details 1,779 projects. Of these, 12 projects are running ahead of schedule, 241 are on time, 559 are running late and more than half of the 967 projects have an original or estimated date of completion unknown.

Regarding the delay, the report says that it ranges from one month to 324 months.

Way of Economic Recovery: Delays in projects are getting heavy

Due to the time limit exceeding or delay, the cost increases or rather the cost increases – as a result, taxpayers have to pay more money for this and they have to wait longer.

Then what was the cost of the delay?

Definitions of cost are often redefined to accommodate delays likely within the scope of the government. So there is an approved cost and then the latest approved cost.

As per the sanctioned cost, the cost of 480 projects has increased by 61.5 per cent, which is about Rs 4,46,169.37 crore.

Take a look at this in the context of the increasing burden on the taxpayers. Rs 4.46 lakh crore is more than the allocation made for this year’s food subsidy and is almost double Gujarat’s budget expenditure for 2021.

As per the ‘latest sanctioned cost’, the cost of 446 projects has increased to Rs 2,53,571.33 crore—twice the proposed expenditure for rural development this year—and nearly five times the budget expenditure of Himachal Pradesh for 2021-22.

The pandemic has undoubtedly affected the work, but the picture before that was no different. In 2020, MoSPI listed 1,698 projects, of which nine were ahead of schedule, 231 on time, 483 delayed and more than half of the 975 projects with an original estimated date of completion unknown.

The sanctioned cost increased by 66.7 per cent or say Rs 4.33 lakh crore, while the cost burden increased by Rs 2.69 lakh crore as per the ‘latest sanctioned cost’.

The vignettes in the report highlight the potential of the state at the level of both the central and state governments.

The saga of such projects in Delhi, which are not even complex engineering challenges, gives an idea of ​​what the situation may be like elsewhere.

In 2013, the government proposed the redevelopment and expansion of Lady Hardinge Medical College in Delhi.

The Rs 414 crore project got delayed by 90 months. Similarly, the construction of a special block for mother and child treatment at AIIMS, Delhi, announced in December 2013, has been delayed by 46 months.

There has been a delay of 23 months in the construction of a ground floor + three-storey block at Delhi’s Safdarjung Airport, which is to house the offices of DGCA, BCAS, AERA, AAI and AAIB.

Way of Economic Recovery: Delays in projects are getting heavy

The picture of the states is even worse. In February 2005, the government started the work of setting up a 3X660 MW power plant under NTPC in Bihar’s Barh. Initially, its cost was Rs 8,692 crore, which has now increased to Rs 21,300 crore.

The project was supposed to be completed in October 2011 but is now expected to be commissioned in July 2023, with a delay of 141 months.

An announcement was made in April 2014 to set up a plant related to the manufacturing of rail wheels under Rashtriya Ispat Nigam Limited (RINL) at Rae Bareli. It should have become operational in September 2018. The project is 36 months behind schedule.

In July 2016, the work of setting up AIIMS in Gorakhpur was started, which was to be completed by April 2020. It is now 18 months behind the times.

The gauge conversion project between Nanpara and Nepalganj has been delayed by 66 months. Elsewhere the picture is not much different.

The Accelerated Transport Project was started in 1996 between Belpur and Uran in Maharashtra at an estimated cost of Rs 495 crore, which was to be completed in 2004. With a delay of 216 months, its cost may now be Rs 2,900 crore.

Interestingly, the reasons for delays from a decade or more are virtually unchanged. In March 2013, a report stated the reasons for the delay were- ‘delay in land acquisition, delay in clearance of forest department, delay in supply of materials, geological events, slow progress of work, Maoist activities, deforestation of forest land, ROU/ROW’ problems and law and order etc.’

The reasons for the delay in July 2021 were delay in land acquisition, delay in forest/environment clearance, lack of infrastructure, delay in tender, law and order problems, geological incidents, contractual problems, delay in clearance etc.

This week, the PMO has sought details of projects which are getting delayed so that accountability can be fixed. This is welcome, but at the same time, it is important to examine the structural issues in governance that lead to delays.

The continuation of the delay calls for changes in law, decentralization of approvals and simplification of rules. The efficiency of government processes should be measured specifically on how the system carries out projects.

The government’s own projects also struggle to get approval from regulators, which shows the sluggishness of the ecosystem.