Despite fast-tracking, 47% of mega projects face delays

Law and order problems, delays in land acquisition, rehabilitation and resettlement said to be delaying projects

The formation of the Cabinet Committee on Investments (CCI) notwithstanding, 47 per cent of the 209 central mega projects, with an investment of at least Rs 1,000 crore in each of these, faced delays as of April-end, according to data provided by the Ministry of Statistics and Programme Implementation.

However, there was a slight improvement compared to the situation in March, when 48.5 per cent of the 204 projects saw delays. For the total 209 projects, Rs 6.59 lakh crore had initially been sanctioned. But the cost escalated to Rs 7.79 lakh crore in April, a rise of 18.3 per cent. In March, cost escalation stood at 17.7 per cent.

Last financial year, the government had constituted CCI to fast-track projects that were stuck. “The government keeps on saying it is in the process of clearing projects but it seems nothing has worked at the ground level, as its impact is not seen in infrastructure growth; credit markets are also down,” Madan Sabnavis, chief economist, CARE Ratings, told Business Standard. “The proposal of setting up of CCI had brought some encouragement but currently, even investors are sceptical on investing in the country, as they do not expect a turnaround.” According to latest estimates, the eight core industries in the infrastructure sector grew a meager 0.1 per cent in June, which resulted in the overall infrastructure sector growing just 1.6 per cent in the quarter ended June 2013, against 6.9 per cent in the corresponding period last year.

In fact, the proportion of projects running on schedule has declined from 35.8 per cent in March this year to 32.5 per cent in April. Some projects didn’t have commissioning deadlines and, therefore, didn’t fall within this category, as well as the category of delayed projects.

The worst-hit sectors in terms of delays were steel and petrochemicals. All six steel projects and the sole petrochemical project recorded delays. In the coal sector, five of the nine projects were delayed, while in the power segment, 33 of the 63 projects were running late.

In a written reply to the Lok Sabha on Tuesday, Minister of Statistics and Programme Implementation Srikant Jena had said law and order problems, delays in land acquisition, rehabilitation and resettlement were some of the factors delaying projects. He had added in ministries that had projects with 20 per cent cost overruns and 10 per cent time overruns, standing committees had been set up, and these would be responsible for cost and time overruns.

“The important thing is implementation of standardisation. The agencies should look to plan the work, not the plan. There is a requirement for proper training programmes and capacity building in projects that face delays,” said Raj Kalady, managing director, Project Management Institute.

Of the 13 sectors monitored, all except fertilisers saw cost escalation as of April. Railways recorded the highest cost overrun of 149.5 per cent, followed by water resources (118.6 per cent) and petrochemicals (63.4 per cent).
INDUSTRIAL PROCRASTINATION

• There are 209 mega projects with an investment of at least Rs 1,000 crore each
• The proportion of projects running on schedule has declined from 35.8 per cent in March this year to 32.5 per cent in April
• The worst-hit sectors in terms of delays are steel and petrochemicals. All six steel projects and the sole petrochemical project recorded delays