Cost of annuity projects: A new risk has emerged in govt's financials

This favoured route for financing roads is gaining traction for other infrastructure projects but could result in unsustainable liabilities for the government

As the push for infrastructure projects becomes the new mantra in government business, a new risk has emerged in the financial statements. It is the cost of annuity projects.

At Rs 38,775 crore as of March 2021 this item has seen the largest jump in the list of government liabilities. This is in addition to the Rs 3,46,343.8 crore of total outstanding guarantees on the government books as of March 2021. In just one year, Finance Minister Nirmala Sitharaman has added 11 per cent to total liabilities from these annuity projects.

The dominant presence of annuities has a simple reason. Contractors were