 "infrastructure, infra, real estate")
Many infrastructure development projects in India have faced implementation challenges, leading to significant cost and time overruns. According to data published by the Ministry of Statistics and Programme Implementation (Mospi), as of July 2023, of a total of 1,646 central infrastructure projects costing Rs 150 crore and above, 809 were running behind their original schedules, with an average delay of over 37 months. Further, there is an anticipated cost overrun of 19 per cent at aggregate level with anticipated project cost of Rs 28.6 trillion versus original estimated cost of Rs 23.9 trillion.
A key reason for the time and cost overrun was that various government departments and ministries work in silos with low inter ministerial/inter-departmental coordination and high bureaucratic entanglements. This also leads to inefficient utilisation of resources. The PM Gati Shakti National Master Plan (PMGS-NMP) framework, launched in October 2021, aims to plug this by taking multiple ministries on board and improving coordination. This will improve the pace and efficiency of infrastructure development and support economic growth through seamless multimodal connectivity and logistics efficiency. PMGS-NMP is an integrated approach for infrastructure development in India with a focus on providing multimodal connectivity infrastructure to various economic zones. This framework has representation from 27 central ministries with an objective to break the silos and improve coordination.
The scope of PMGS-NMP primarily covers projects across seven infrastructure segments (also referred to as seven engines — Railways, Roads, Ports, Waterways, Airports, Mass Transport, Logistics Infrastructure) and includes projects developed by both central and state governments. The projects pertaining to these seven engines in the National Infrastructure Pipeline (NIP) will be aligned with the PM Gati Shakti framework. It will cover the infrastructure schemes of various ministries and state governments like Bharatmala (highways), SagarMala (ports), inland waterways, dry/land ports, UDAN, and economic zones, etc, to improve connectivity. All the existing and proposed economic zones, along with planned interventions, have been mapped to a single platform. The PMGS-NMP will help in improving the efficiency of the transportation network in India by removing gaps for seamless connectivity.
The PMGS-NMP will add to the potential opportunities for infrastructure and construction entities. The projects identified under the NIP have increased from an initial value of Rs 111 trillion (6,835 projects) to the current estimate of over Rs 156 trillion (9,217 projects). Apart from the ongoing projects and regular project additions under the NIP, 85 projects worth Rs 5.39 trillion have been approved under PMGS till July 2023 to be included in NIP. Further, projects that have been languishing due to various issues in the past are also likely to be resolved by better cooperation among various ministries through Gati Shakti. In the first year of PMGS (till October 2022), 1,380 projects were monitored by PMG with over 1,300 issues resolved. The PM Gati Shakti framework points to ramping up capacity in planning, design, financing, and implementation management by taking technical support from the Capacity Building Commission, the central ministries, state governments, and their infra-agencies.
While PMGS will reduce the execution bottlenecks and improve the preparedness of the project owners before the contracts are awarded for execution, the operational and financial capabilities of agencies and contractors executing these projects will also be critical in ensuring their timely implementation and the effectiveness of PMGS initiative. A recent audit report by CAG, which covered a sample of projects under Bharatmala Pariyojana during the 2017-18 to 2020-21 period, drew attention to projects being awarded to less qualified contractors, which had a bearing on the execution.
With the increasing scale of projects under implementation, the contractor’s financial ability could become a bottleneck as sizeable resources (equipment, manpower, and bank guarantee limits) are required to ramp-up execution; the capability-building measures under the framework could address this challenge. The CAG report also highlighted that the detailed project reports (DPRs) prepared by consultants were not appraised with due diligence by the competent authority before the projects were approved. Many a time, the authorities know that actual implementation/ project awards may happen several years after the DPR preparation date and, therefore, DPRs/consultants do not attract the kind of scrutiny that implementing agencies do. The scrutiny of DPRs by authorities should be a key focus area — a neatly-laid DPR makes the project execution smooth and reduces the scope for disputes later. The selection of DPR agencies should be solely based on the quality of work done and the deviations noticed in the past. While these are not high-value contracts, a good DPR saves significant time and cost.
The Gati Shakti framework, if implemented according to plan, has the potential to immensely help the government achieve its objective of reducing the logistics cost by 4-5 per cent, from about 13-14 per cent of the GDP currently to about 9 per cent of it in the next 3-5 years (the logistics cost in other developed economies ranges between 8 and 11 per cent, according to a Niti Aayog report).
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The writer is Group Head and Senior Vice President, Corporate & Infrastructure Ratings, ICRA Ltd
