Cost of UPA delay is Rs 1.2 lakh crore

Here is a statistic out of Dr Manmohan Singh's nightmares: the country has lost an astounding Rs 1,16,724 crore due to cost-overruns in 203 infrastructure projects. This works out to 68 per cent over the approved original cost. And these are the official figures from the Ministry of Statistics and Programme Implementation that monitors the 600 infrastructure projects that cost over Rs 150 crore each. The overruns in projects that cost less than Rs 150 crore would only further inflate the bill for the Manmohan Government's incompetence.

Rs 1,16,724 crore is indeed a big hole in the country's finances. It's well over twice the current Bihar budget of Rs 53,927 crore. This money could also be used to build more than 11,000 Kendriya Vidyalayas at Rs 10.5 crore per building. It's also almost as huge as the estimated Rs 1,50,000 crore 2G scam that's rocking Parliament these days.

Is Dr Singh awake to these facts?

Cost overruns are half the story; they go hand in hand with delayed execution. More than half of these projects-306-have gone well beyond their completion schedule, the range of delay spanning a continuum of despair from one to 225 months. Not surprisingly, most of the projects in the rail ministry fall in the "slow progress" bracket. The ministry cites land acquisition and fund constraints as a major cause of the delays.

Former finance minister Yashwant Sinha is appalled. "It is a scandalous situation. Every government has the responsibility to streamline cost-overruns and time delays. bjp showed its concern and created a monitoring unit by setting up the Ministry of Statistics and Programme Imple-mentation with a driven minister like Arun Shourie in charge of it," he says.

Unfortunately Shourie's successors in the UPA, first G.K. Vasan and the current Sriprakash Jaiswal both lack his air of authority to reprimand their ministerial colleagues. Despite Manmohan's penchant for setting up monitoring systems, this particular ministry has been reduced to a parking lot to accommodate ministerial hopefuls. Of course further checks and balances are provided by the cabinet secretary and the Prime Minister's Office (PMO). But somehow, the six-digit slip between the cup and the lip won't go away. Ironically, it was only last month that the PMO was busy briefing the media about how a diligent Manmohan had met ministers and reviewed key development projects.

According to Rajeev Chandrasekhar, industrialist and independent Rajya Sabha MP, "The current approach of the government to this whole issue is tentative and amateurish-banking on the cabinet secretary and PMO monitoring to accelerate infrastructure projects is a flawed model-and doesn't create institutional, broad-based solutions. The whole country has already seen what monitoring by government bureaucrats can do for infrastructure, like in the Commonwealth Games 2010."

The star underperformers are projects being executed by the ministries of health and family welfare, railways, urban development, petroleum, and water resources. The ministers in charge could well be mascots for overruns and delays: a disinterested Ghulam Nabi Azad who prefers playing politics at 24 Akbar Road to health matters, a state-centric and administratively clueless Mamata Banerjee heading railways, Jaipal Reddy who would rather be chief minister of Telangana than handle urban development, a harried Murli Deora with petroleum and a bored Pawan Bansal in charge of water resources. The prime minister had hoped and hinted he would correct this governance mismatch with a cabinet reshuffle but like most of his best-laid plans, this too seems to have gone to waste.

CPI(M) leader Sitaram Yechury was not at all surprised when he heard that the Left's favourite target Banerjee tops the list of defaulters. He also blamed the "overemphasis" on public-private partnership (PPP) projects for the mess. "In no country in the world, from the US to China has infrastructure been developed by reliance on private capital. Private capital can at best supplement public investment," he says.

The PPP model is a favourite both with Manmohan and his best buddy at the Planning Commission, Montek Singh Ahluwalia. What is needed, however, is getting the right systems in place, whether it's a public sector unit or a PPP project. As Sinha points out, 269 of the 306 delayed projects have overshot their time-frame by a maximum of 60 months, which falls squarely within the UPA's six years in power. The reasons cited for delays are bureaucratic and age-old environment clearances, land acquisition, fund constraints and delays in the award of contracts. For as many as 73 projects, the date of commissioning still has to be firmed even though the projects have been sanctioned. These are mostly in the rail, surface transport and telecom sectors. Vinayak Chatterjee, chairman, Infrastructure Leasing and Financial Services, says, "It's an interplay of politics and mismanagement. Look at the railways. The countryside is littered with unfinished projects that have been announced by various ministers to please their constituencies and then abandoned."

If it's not ministerial apathy, it's the bureaucratic red tape. Sometimes, even the right man at the helm cannot deliver. Kamal Nath, the minister for roads, transport and highways, who was a successful commerce minister during UPA-I, is now one of the non-performers of UPA-II. Though he seems to have met all the target costs, he hit a rough patch on the time-frame. Nath explained what he was up against citing the example of road projects that passed through a National Park or a sanctuary. These require the approval of the National Board of Wildlife even for the initial step-undertaking a survey. However, Nath points out that the board meets once in three months.

Chandrasekhar agrees, "The solution lies in strengthening independent regulation and strong contracts (to address policy risk and prevent crony capitalists from hijacking PPPs), creating capacity and innovation in financial markets to fund such risks, and to address land issues before projects commence as opposed to the current model of 'let's cross the bridge when we come to it'." But the way the infrastructure story is going in Manmohan Singh's watch, these may be bridges too far.