"The government can forfeit the deposit if the contractor fails to complete the work. But in the past few months, there have been several cases of contractors preferring to forfeit the security deposit as it was cheaper than completing the work at higher input costs," said Union Rural Development Minister Raghuvansh Prasad Singh.
Ministry officials say once the work is approved, the project cost can't be revised. However, a revision is possible if prices of raw materials shoot up between the period a tender is released and approved. In the first two months of the current financial year, three states have sought to use this provision: Madhya Pradesh has asked the Centre for Rs 54 crore more, Chhattisgarh Rs 69 crore, Orissa Rs 70 crore, while NHPC (one of the five central agencies looking after Bihar) has sought Rs 77 lakh more.
The ministry is feeling the pinch for fresh tenders also. Like in Tamil Nadu, the estimated cost per km is Rs 34.94 lakh in 2008-09, a sharp increase from Rs 25.25 lakh in 2006-07. In Assam, the per-km cost is Rs 64.80 lakh, a rise from last year's Rs 57.92 lakh.
Rs 14,530 crore has been allotted for the scheme in 2008-09. Although this is an increase of Rs 11,000 over the previous year's outlay, the ministry is having a tough time in getting the required number of contractors. "We are facing four major problems in implementing the PMGSY. The first is capacity shortage as many contractors are not able to handle the extra work in the current situation," Singh said.
He said lack of participation of the contractors was delaying projects and thus further escalating prices. "We have to issue tenders repeatedly. There are several instances where the ministry had to issue a tender 8-10 times. The contractors have complained about shortage of materials like tar and stone chips. As prices of these commodities have gone up, the contractors find it difficult to buy," the minister added.
More From This Section
The price of bricks, which was Rs 2,000 per thousand, has also shot up to Rs 3,500-3,600 in the last few months, said Singh.
"There are roads where the first two layers, of clay and bricks, have been laid. But then the contractors stopped working," he added.