Calling for an immediate intervention, the Economic Survey for 2013-14 has noted that the core sector investment in India has been hit due to design flaws in policies and delays in 110 central infrastructure projects, which has caused cost overruns in excess of rs 1.57 lakh crore.
“The first wave of infrastructure investment in India has been grounded in an array of design flaws that now need to be addressed,” said the survey tabled in Parliament on Wednesday.
It said problems in the sector resulted in a “large number of stalled projects, a balance sheet crisis for many infrastructure and natural resources firms, and difficulties for banks, which have lend them”. To top it all, allegations of corruption, intervention by investigating authorities, problems in land acquisition and regulatory hurdles took toll on the infrastructure sector projects, it added.
The survey added that the issues that need urgent redressal include “removing procedural bottlenecks, improving governance, and above all maintaining consistency in the government infrastructure policies”.
The key government document expressed concerns that as many as 110 out of 239 central sector projects, each costing Rs. 1,000 crore or more, have reported delays, which range up to 26 months in case of steel, coal, power and petroleum projects.
“The total original cost was about Rs. 7,39,882 crore and their anticipated completion cost is likely to be Rs. 8,97,684 crore, implying an overall cost overrun of Rs. 1,57,802 crore (21.3% of the original cost),” it said.
“Revamping of laws and regulations governing business is urgently needed,” said Ajay Sriram, president, CII. “Infrastructure will continue to be a bottleneck for growth and an obstacle to poverty reduction unless sectors particularly transport, energy and communication are significantly improved.”