The road to economic recovery, say economists and policymakers, must be paved with increased public spending on infrastructure. The infrastructure push of Rs 100 lakh crore, aka “Gati Shakti Bharat Master Plan” announced on Independence Day, is based on this conviction. The thesis is that public investments in infrastructure stimulate demand, job creation, income, consumption and growth. The question then is, how efficiently is taxpayer money being spent?
The Ministry of Statistics and Program Implementation (MOSPI) produces a detailed report every three months on the status of central sector projects costing Rs 150 crore and more. The 887-page April-June 2021 report details the status of 1,779 projects – including 12 projects early, 241 on schedule, 559 late and more than half, or 967 projects, by the completion date initial or expected is unknown. Delays, the report reveals, range from one month to 324 months.
Typically, time overruns or delays result in cost overruns or higher expenses – in effect, the taxpayer pays more for the same and has to wait longer in the denial queue. So what was the cost of the delays? As might be expected, with government, cost definitions are frequently redefined to account for delays. So there is the sanctioned cost and the last approved cost.
According to the sanctioned cost, 480 projects suffered a cost overrun of 61.5%, or Rs 4,46,169.37 crore. For a perspective of the higher burden on the taxpayer, consider this. Rs 4.46 lakh crore is more than the allocation for the food subsidy this year – and is almost double the total expenditure of Gujarat’s budget for the year 2021. According to the “last approved cost”, the cost of 446 projects has increased to Rs 2,53,571.33 crore – double the spending on rural development this year – and nearly five times the spending in Himachal Pradesh’s budget for 2021-2022.
Of course, the pandemic has erased the works, but the picture was not much different before either. In 2020, MOSPI identified 1,698 projects, 9 of which were ahead of schedule, 231 on schedule, 483 late and for more than half, or 975 projects, the initially planned completion date was unknown. The cost overrun according to the sanctioned cost was 66.7% or Rs 4.33 lakh crore, while the cost burden according to the “last approved cost” increased by Rs 2.69 lakh crore.
The vignettes in the report shed light on the state of state capacity, both at Union and state government level. The saga of projects, which are not complex engineering challenges, located in Delhi gives an idea of what may be the situation 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 more than 92 months. Land plus a three-story block to house the offices of DGCA, BCAS, AERA, IAA and AAIB at Safdarjung Airport in Delhi is delayed for 23 months. The picture is not much different elsewhere. In 1996 a rapid transport project between Belapur and Uran in Maharashtra was started at an estimated cost of Rs 495 crore to be completed in 2004. Phase I was completed in 2018. Phase II is taken in the “si and but “. Delayed for more than 216 months, the project could cost more than Rs 2,900 crore.
In 2016, the Indian Airport Authority proposed the construction of a new ATC tower at Kolkata airport. Reason: following the construction of the new terminal, the “view of the operational area is partially blocked”. You would think it was a project that required urgency. The project is delayed for more than 21 months. Three rural road projects in Tripura under the PMGSY are 74, 69 and 63 months behind schedule.
What is fascinating is that the reasons for the delays have been virtually unchanged for a decade and more. In March 2013, a report on megaprojects listed the cause of the delays as follows: “delay in land acquisition, delay in clearing forests, delay in supplying materials, geological surprises, slow construction, Maoist activities, diversion of forest land, ROU / Right-of-way issues, law and order, etc. The reasons for the delay in July 2021 are: delay in land acquisition, obtaining forest / environmental authorizations, lack of infrastructure support, delay in tenders, public order issues, geological surprises, contractual issues, delays in approvals, etc. In fact, nine of the issues lie with the Union government, eleven with the states, four involve political confusion, and seven relate to the operational quagmire.
This week, PMO reportedly researched details of which projects are significantly delayed and the cause of those to establish liability. While welcome, it is also essential to look at the structural governance issues that cause delays. The persistence of delays calls for legislative changes, decentralization of authorizations and simplification of regulations. The effectiveness of government processes will and should be measured in particular on how the system carries out projects. The fact that even the government’s own projects are struggling to clear regulatory roundabouts illustrates the laziness that haunts the ecosystem.
Author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India [email protected]