29th APRIL 2016
Answer questions in NOT MORE than 200 words each. Content of the answer is more important than its length.
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GS III : INFRASTRUCTURE
1. More than half of the big infrastructure projects in India related to road transport and highways, power and railways are into cost and time overrun. What are the reasons for the same? Suggest innovative measures to avoid such scenarios in the future.
The cost of 238 major projects of the union government have almost doubled from the original estimate of Rs.2.4 lakh crore to Rs. 4.6 lakh crore, according to latest official data. The number of projects exceeding the budget surged 43 per cent by March 2016 over a period of four years, the data on projects costing Rs.150 crore or more showed.
Most cost and time-overruns pertained to the infrastructure sector with the Railways contributing 68.5 per cent of projects overshooting the budget as on March 1, 2016, up from 56 per cent four years ago.
The power sector contributed the next-highest with 9.4 per cent as on March 1, 2016, down marginally from the 10.5 per cent as on April 1, 2012.
The road sector contributed 7.7 per cent of projects facing cost-overruns as on March 1, 2016.
“The causes for time and cost overruns are project-specific, depend on a variety of technical, financial and administrative reasons, and differ from project to project,” Minister of State (Independent Charge) for Statistics and Programme Implementation V.K. Singh informed the Lok Sabha.
The Ministry monitors the central sector infrastructure projects costing Rs 150 crore and above on the basis of information furnished by project implementing agencies
Infrastructure projects running into delays and cost overruns because of bureaucratic snarl-ups is not uncommon in India, where the problem has been compounded in recent years by an economic downturn that crimped finances as well as snags in completing land acquisition.
Historically, the railways announced more projects than it has funds available for. One can now hope, with better project management being spoken about, these would be issues of the past,
“Railway projects are stretched across long distances, and they involve land acquisition. Often, it involves making a choice between taking a shorter route and saving time and cost or opting for the longer route and increasing the construction time period and the costs.” Such choices are politically sensitive. There is substantial uncertainty which causes time and cost overruns.
Land acquisition, delayed clearances and financial constraints have plagued road building.
In the power sector, projects are facing delays, mainly due to forest clearance, right of way and land acquisition issues.
Original project estimates should ideally include the original cost as well as the expected cost escalation in the event of delays.
Steps such as on-line computerised monitoring system, setting up standing committees in ministries for fixation of responsibility for time and cost overruns, regular review of infrastructure projects by concerned ministries are among the steps taken to ensure timely and cost effective completion of projects, the Minister informed.
Besides, Central Sector Projects Coordination Committees have been set up in states under the chief secretaries for removal of bottlenecks and for facilitating the speedy implementation of major projects.
To expedite completion of delayed road projects, various steps have been taken, which include streamlining of land acquisition, environment clearances, exit for equity investors, premium re-schedulement, securitization of road sector loans, close coordination with other ministries, revamping of dispute resolution mechanism, frequent reviews at various levels
Mr. Deep Mukherjee, senior director at India Ratings and Research Pvt. Ltd., however says, “Not all government projects are meant to be commercially viable. What one needs to aim for is efficiency.”