Infra projects hit roadblock, 11 L-cr investment in limbo
Red-tape, weak commodity prices, fund crunch main reasons
NEW DELHI: The Narendra Modi-government’s plans to fast track infrastructure projects seem to have run into a speed breaker, hit by increased delays and cost overruns over the last two years.
The number of delayed, or stuck projects, has jumped significantly despite the government’s efforts to hasten bureaucratic decision-making, ease procedures, and raise the pace of project execution.
As on March this year, 893 infrastructure projects worth ` 11.36 lakh crore across a range of sectors, from thermal power to highways, were delayed.
This is a sharp jump from the 816 stuck, or delayed, projects valued at ` 9.68 lakh crore as of March 2015, and 766 worth ` 9.79 lakh crore as of March 2014, according to data assembled by the Centre for Monitoring Indian Economy, a research agency.
“Unfavourable market condi- tions, weak commodity prices, funding constrains, poor raw material linkages, are the key reasons contributing to the increase in stalled projects,” sources in the government as well as private sector told HT.
A host of factors, including inter-ministerial consultations, environmental concerns and procedural bottlenecks at the states, continue to slow down infrastruc- ture project implementation.
Mounting bad loans, which has topped ` 4 lakh crore, have also made banks reluctant to lend to projects that are prone to delays.
India would require about $1 trillion (`66 lakh crore) — half of the value of national GDP — over the next five years to overhaul its collapsing infrastructure.
The Modi-led NDA government aims to build 40 km of highways every day, four times more than the previous UPA government’s target, which it had failed to achieve.
Road and other infrastructure projects can spur economic activity, boost construction and create jobs.
According to credit rating and research firm Crisil, the construction sector is the most labour-dependent among all nonagricultural sectors, requiring more than 12 people to produce ` 10 lakh of real output.
Experts said delays are happening despite the government’s policy focus to eliminate red-tape to get stalled projects going.
“The government is trying to address the root causes for project delays such as environmental clearances, longterm financing instruments. But, what’s concerning is the number of stalled projects are rising every quarter,” said Neeraj Sharma, director, Grant Thornton Advisory Private Ltd, a consulting and audit firm.