Infrastructure projects in India are well known for cost overruns and delays. They are facing even more trouble this year due to the outbreak of coronavirus. Asia’s third-largest economy has been impacted badly due to pandemic, affecting India’s economy and its various sectors including the Infra sector.
According to a survey by the Statistics Ministry, construction of everything from roads to ports has been delayed by an average of 3.5 years. The latest report as of April by the ministry shows that Costs of 1,682 projects have shot up by a combined Rs 4 lakh crore over their life cycle. Projects such as the 3,300-kilometer freight rail network to connect India’s eastern and western regions are facing new threats because of the nationwide lockdown for more than two months and due to the continued restrictions.
The state-run Dedicated Freight Corridor Corp. of India Ltd was conceived in 2006 and was scheduled to be completed by 2016 but it missed several deadlines and now it is expected to be completed by December 2021.
Rail Ministry’s top bureaucrat V.K Yadav stated, “The project will be completed as per schedule despite the pandemic crisis” whereas, Suvodeep Rakshit, an economist with Kotak Securities Ltd in Mumbai beliefs that “The lockdown induced due to the pandemic crisis will lead to delays in infrastructure projects and the multiplier effect of infra works will also be missing which will overall impact both at micro and macro levels.”
- India’s Banks are racing to lend against a $1.5 trillion hoard of Gold
- In a World first: Australia wants Google and Facebook to pay for news content
On Monday the Governor of Reserve Bank of India, Shaktikanta Das said, “India has made progress in infrastructure but gaps remain”, as he made a case to increase investments in the infra sector to boost the economy.
Costs are not limited to the projects as some delays in adding railway infrastructure such as-
- Building new lines to making more wagons
- Hinder fuel supplies to power plants
Freight and passenger trains hustle for space on the same tracks and goods carriers often have to make way for passenger traffic, Prolonging the turnaround time for carriages to haul coal the mainstay of power generation in the nation.
Modi government has prepared a plan for $1.5 trillion of such projects for the next 5 years. But the delays in land acquisition, environmental clearances, and financing have put on hold projects over the years. Multilateral lenders face a big problem of funding projects in India.
Hemant Kanoria, Chairman of Srei Infrastructure Finance Ltd. in Kolkata, beliefs, “Currently everything is in a state of pandemonium” and if proper steps are not taken to recast loans for construction firms, clear the dues owed by government or steps to resolve the disputes to ease cash flow are not taken then “Everyone is dead.”
(Source: The Economic Times)