Impediments to economic growth

The original cost of 1,838 projects, which was Rs 27,64,246.50 crore at the implementation stage, is estimated to increase by over 20 per cent to Rs 33,19,601.84 crore at the time of completion, A total of 792 projects have overshot their deadlines for completion, of which, the completion of 380 projects will be delayed by 5 years to more than 5 years beyond schedule. Can India afford the huge loss incurred from avoidable delays in project implementation?

India’s inherent potential to scale many notches up the economic scale have been stymied by lethal combination of lopsided policies, gross mismanagement of resources, dysfunctional and malfunctioning official machinery, omnipresent corruption and unscrupulous political regimes.

One of the major impediments to the overall economic progress is the massive drain on the exchequer caused by the huge cost escalation due to protracted implementation and completion of infrastructure projects. For obvious reasons, this crucial fact is either downplayed or pushed under the carpet, while showcasing performance indicators.

Ministry of Statistics and Programme Implementation (MoSPI) data on delayed projects and its financial implications, reflects gross irresponsibility and laid-back style of implementing agencies. According to the latest data, time and resultant cost overruns of 448 projects – worth Rs 150 crore and above – amounted to 5.55 lakh crore. The original cost of 1,838 projects, which was Rs 27,64,246.50 crore at the implementation stage, is estimated to increase by over 20 per cent to Rs 33,19,601.84 crore at the time of completion, A total of 792 projects have overshot their deadlines for completion, of which, the completion of 380 projects will be delayed by 5 years to more than 5 years beyond schedule. Can India afford the huge loss incurred from avoidable delays in project implementation?

Project cost and resultant time overruns have proved to be main impediments to development and growth of the country. An economy starved or deprived of resources and infrastructure will become brittle and unsustainable. For instance, agriculture output would have increased manifold if irrigation projects had been completed according to schedule. Increased water resources would have facilitated more areas including drought prone areas to be brought under cultivation.

Dearth of infrastructure could mean stagnant or sluggish growth. Projects completed after a long duration could also result in their possible redundancy – the infrastructure would no longer be of any use after completion. Such an eventuality has become a possibility in view of fast paced state-of-the-art developments.

Indian economy has incurred huge losses due to delay in completion of projects. According to reports, on an average project delays have been in range of 5 to 20 years. Cost and time overruns will not only impose heavy burden on the finances, but also incapacitates the country to keep pace with the growing demands for infrastructure.

The ramification of cost and time overruns are many and it impacts every area of economy. Cost escalation would force the government to opt for more borrowings or make adjustments in the budgeted allocations for other purposes. Such unplanned expenditure and debts to meet project cost escalation will inevitably create a huge burden on the government coffers apart from considerable increase in debt servicing. According to the finance ministry India’s external borrowings as on March 2024 was at a whopping $663 billion and its interest payments on these debts is reported to be around 20 per cent of the country’s total expenditure.

The narrative continues with financial burdens accumulating to insurmountable proportions. The Comptroller and Audit General of India – CAG- have very often exposed innumerable deficiencies and improprieties in the implementation of government projects and the resultant cost and time overruns. It had also, frequently, pointed out flimsy and irrational reasons given by the governments to justify their indiscretions.

Shockingly, there have never been any attempts on the part of the various governments to rectify the faults within and prevent cost and time overruns. Establishments, over the years have been quick to come out with excuses and reasons for delays, but demonstrated an innate incompetence in preventing the resultant fiscal anarchy. India is also paying a heavy price due to omnipresent corruption in the corridors of power. Projects are overvalued to a level many times higher than the original cost to accommodate bribes for those at the helm of affairs,

(Writer is a senior journalist)