Infra Project Delays: Loss of Tax Payer Monies
The fact that even the government’s own projects struggle to clear the regulatory roundabouts illustrates the sloth haunting the ecosystem.
By Shankkar Aiyar | Published: 05th September 2021 06:38 AM |
The road to economic recovery, economists and policy makers aver, must be paved with increased government spending on infrastructure. The Rs 100 lakh crore infrastructure push, aka ‘Gati Shakti Bharat Master Plan’ announced on Independence Day, rests on this belief. The thesis is that government investment in infrastructure spurs demand, job creation, income, consumption and growth. The question, therefore, that begs to be asked is how efficiently are tax payer monies being spent?
The Ministry of Statistics and Programme Implementation (MOSPI) produces a detailed report every three months on the status of central sector projects costing Rs 150 crore and above. The 887-page April-June 2021 report details the status of 1,779 projects — of which 12 projects were ahead of schedule, 241 on schedule, 559 delayed and for more than half, that is 967 projects, the original or anticipated date of completion is unknown. The delays, the report reveals, range between one month and 324 months.
Typically, time overruns or delays result in cost overruns or higher expenditure — effectively the tax payer pays more for the same and must wait longer in the queue of denial. So what has been the cost of the delays? Predictably, with the government, definitions of cost are frequently redefined to accommodate delays. So there is the sanctioned cost and then there is the latest approved cost.
As per the sanctioned cost, 480 projects suffered from cost overrun of 61.5 percent, that is Rs 4,46,169.37 crore. For a perspective of the higher burden on the tax payer consider this. Rs 4.46 lakh crore is more than the allocation for food subsidy this year — and is almost twice the total expenditure of Gujarat budget for the year 2021. As per the ‘latest approved cost’, the cost of 446 projects has gone up by Rs 2,53,571.33 crore — that is twice the expenditure earmarked for rural development this year — and nearly five times the expenditure of Himachal Pradesh budget for 2021–22.
Of course, the pandemic has gummed up works but the picture wasn’t very different before as well. In 2020, MOSPI listed 1,698 projects of which 9 were ahead of schedule, 231 on schedule, 483 delayed and for more than half, that is 975 projects, the original anticipated date of completion was unknown. The cost overrun as per sanctioned cost was 66.7 per cent or Rs 4.33 lakh crore, while the burden of cost as per ‘latest approved cost’ rose by Rs 2.69 lakh crore.
Vignettes from the report illuminate the state of state capacity — both at the level of the Union and state governments. The saga of projects, which are not complex engineering challenges, located in Delhi gives an idea of what may be the circumstance elsewhere.
In 2013, the government proposed the redevelopment and expansion of Lady Hardinge Medical College, Delhi. The project, which was to cost Rs 414 crore, is delayed by over 92 months. A ground plus three storied block to house the offices of DGCA, BCAS, AERA, AAI and AAIB in Delhi’s Safdarjung Airport is delayed by 23 months.
The picture is not very different elsewhere. In 1996, a rapid transport project between Belapur and Uran in Maharashtra was initiated at an estimated cost of Rs 495 crore to be completed in 2004. Phase I was completed in 2018. Phase II is caught in “ifs and buts”. Delayed by over 216 months, the project could cost over Rs 2,900 crore.
In 2016, the Airport Authority of India proposed construction of a new ATC Tower at Kolkata airport. Reason: following the construction of the new terminal building the “view of the operational area is partially blocked”. You would think this was a project which demanded urgency. The project is delayed by over 21 months. Three rural roads projects in Tripura under the PMGSY are running 74, 69 and 63 months behind schedule.
What is riveting is that the reasons for delays are virtually unchanged since a decade and more. In March 2013, a report on mega projects listed the cause for delays as: “delay in land acquisition, delay in forest clearance, delay in supply of material, geological surprises, slow progress of work, Maoist activities, diversion of forest land, ROU/ROW problems, law and order, etc.”
The reasons for delay in July 2021 are: delay in land acquisition, obtaining forest/environment clearances, lack of infrastructure support, delay in tendering, law and order problems, geological surprises, contractual issues, delays in approvals etc. Effectively nine of the issues fall under the Union government, eleven under states, four involve policy confusion and seven related to the operational quagmire.
This week, the PMO is reported to have sought details of projects which are delayed substantially and the cause thereof to fix accountability. While this is welcome, it is also critical to examine the structural issues in governance which result in delays. The persistence of delays calls for changes in legislation, decentralisation of clearances and simplification of regulations.
The efficiency of the government’s processes will and must be measured particularly on how the system shepherds projects to fruition. The fact that even the government’s own projects struggle to clear the regulatory roundabouts illustrates the sloth haunting the eco-system.
Shankkar Aiyar, political economy analyst, is author of ‘The Gated Republic –India’s Public Policy Failures and Private Solutions’, ‘Aadhaar: A Biometric History of India’s 12-Digit Revolution’; and ‘Accidental India’. You can email him at email@example.com and follow him on Twitter @ShankkarAiyar. His previous columns can be found here. This column was first published here.