Social media over the past few weeks has been flooded with news and pictures of bridges collapsing, roofs at airports crashing, newly laid expressways being washed away or developing huge cracks, and rainwater gushing through the roofs of newly built airports and railway stations. Citizens are justifiably concerned about the quality of infrastructure being built, especially since the government has massively stepped up infrastructure spending. Over Rs 10 trillion was allotted in each of the last two Budgets, and the level of allocation has been planned to be maintained. The worry, though, isn’t merely the quality of the infrastructure being built. A bigger question is the enormous delays that continue to plague the construction of infrastructure projects. This shows up in the data put out by the Ministry of Statistics and Programme Implementation (MoSPI).
As on April 1, 2024, MoSPI was monitoring 1,873 projects — 612 mega projects (Rs 1,000 crore and above) and 1,261 major projects (Rs 150-1,000 crore). Of the 1,873, 449 have overshot their sanctioned cost and 779 have suffered delays. These projects were supposed to cost Rs 26.87 trillion but the cost, as of now, has shot up to Rs 31.88 trillion — an 18.65 per cent jump. Fortunately, the largest outlay is on road projects (1,093 projects being monitored), where the cost overrun has been much less; it is only from Rs 8.38 trillion to Rs 8.68 trillion. But implementation has gone haywire in the Indian Railways, which has the second-biggest chunk of projects sanctioned. There are 249 railway projects underway, and their original cost of Rs 4.44 trillion has ballooned to Rs 6.85 trillion till now, a rise of 54 per cent. Another area of massive cost overrun has been water-resources projects, for which the costs have increased 200 per cent. Against the original sanction of Rs 23,466 crore, it is estimated these projects will cost Rs 69,700 crore. Atomic energy, petroleum, and power are three other areas that have seen large cost overruns.
Now let us turn to delayed projects. Of the 1,873, 701 projects are on time, while 779 have been delayed. Of these, 202 were delayed by 1-12 months, 181 by 13-24 months, 277 by 25-60 months, and 119 by more than 60 months. The average time overrun was a massive 36.04 months or three years. What is worse, the ministry does not have information about the commissioning schedule of as many as 393 projects. In recent years, the government has apparently been working at bringing down this number. Yet, in 2017-18 55 per cent (or 731 projects) of the 1,232 projects being monitored were open-ended, that is they were without any firm date of completion.
Concerned about the delays, in February 2023, the Prime Minister asked all government agencies to complete pre-construction work like shifting utilities and land acquisition well in advance. A national daily quoted the Prime Minister as saying: “Don’t you feel the pain of delay (in completing projects).” Way back, in March 2015, the government had set up PRAGATI, an acronym for “Pro-Active Governance And Timely Implementation”, which aimed to combine two completely unrelated issues: Redress of public grievances and timely implementation of projects. A government press release at that time said PRAGATI was a uniquely integrating and interactive platform, bundling three latest technologies — digital data management, video-conferencing, and geo-spatial technology for “simultaneously monitoring and reviewing important programmes and projects of the Government of India as well as projects flagged by State Governments”. Clearly, PRAGATI has had little impact; only the number of projects with completion dates has increased as against a larger number of open-ended ones earlier.
Among the causes of cost escalation identified by MoSPI are under-estimating the original cost, changes in rates of foreign exchange and statutory duties, cost of environmental safeguards and rehabilitation measures, land acquisition costs, changes in the scope of projects, and time overruns. The reasons for time overruns are listed as changes in the scope of projects, encroachment, court cases, lack of infrastructure support and linkages, delays in land acquisition, obtaining forest/environment clearances, tieups in project financing, detailed engineering, tendering, ordering and equipment supply, and getting clearances from local authorities.
All these reasons are well known and have existed for decades. No matter which party has been in power, there has been no change in an ecosystem destined to cause cost and time overruns. We should assume all these factors will continue to inflict cost and time overruns in future. Against this background, what happens to the massively increased outlays on defence production, urban infrastructure, railways, renewable energy, transportation, water supply, etc. The central government’s capital expenditure as a percentage of total expenditure hit an extraordinary 28 per cent in FY24 from just 14 per cent in FY14. Working within the same legal, social, political, and governance system, delays and cost overruns are only going to increase manifold.
The writer is editor of www.moneylife.in and a trustee of the Moneylife Foundation; @Moneylifers