Despite supportive statements from the government, delayed approvals, cost-overruns, poor planning and execution have plagued infrastructure projects for years. According to the government’s latest quarterly project implementation status report, things have only deteriorated of late. After a study of 590 major protects worth `150 crore and above, the report found that 283 of these have been delayed, some by many years. A majority of these delayed projects related to highway and surface transport sector, followed by power and petroleum and the delay ranged from one month to 36 months. While hurting the growth story, such delays and resultant cost overruns also discourage foreign investment in India.
Public-private partnership (PPP) projects in the infrastructure sector require mandatory security clearance from various ministries. Apart from land acquisition problems, most projects across the country have been crippled by inordinate delay in obtaining these clearances. The representatives of Indian industry have already complained about this to the prime minister and the Union commerce and industry minister, with a long list of major projects that are facing clearance hurdles. They have also complained about lack of uniformity in awarding clearances and pointed out the case of an Indian company running the largest private port in Gujarat, which has been allowed to bid for a project in Tamil Nadu but was denied security clearance for a port project in Kerala.
The UPA government’s failure to push up infrastructure projects has already led to a decline in foreign direct investment, which plunged to a five-year low in 2001. Though Manmohan Singh has set an ambitious target of $1 trillion investments in infrastructure in the next five years, the progress report continues to paint a bleak picture. To restore investor confidence and push up growth, the government should put the process of obtaining clearances and approvals from different ministries and departments on fast track and the exercise should be more transparent. It should put in place a single-window mechanism for clearing large infrastructure projects.
