Political interventions need to be eliminated to complete infrastructure projects within the stipulated time frame

- Rising costs are becoming a major challenge in completing projects

Like most countries in the world, India's economic growth rate is based on the overall development of the infrastructure sector. In view of this fact, infrastructure development in the country is being given priority and some steps are being taken for rapid development. In recent times, the government has undertaken an exercise in policy reshuffle, more allocation in the budget for the infrastructure sector, creation of special funds and identification of advance sectors. In addition, the government has set up a Development Finance Institution (DFI). A bill to this effect has been passed in both the Houses of Parliament and this DFI has been named as National Bank for Financing Infrastructure and Development.

Every type of project in the infrastructure sector is long term, which is not easy to complete in time. According to the latest figures, there are currently 18 projects underway in nine sectors. Of these, about 20 projects have cost more than 20 per cent of their original estimated cost. Expenditure has increased from Rs 21,3,6.5 crore to Rs 2,8,50.5 crore. There are a number of reasons behind the increase in estimated costs. These factors include time lengthening, lower cost estimates in the first estimate, and so on.

The budget for the current financial year emphasizes on increasing investment in infrastructure in the budget by allocating funds directly to various ministries concerned for infrastructural development. The focus is on enhancing infrastructure, especially in urban areas, so that employment can be created in urban areas. The allocation for the infrastructure sector continues to increase in the annual budget with the assumption that higher allocations for infrastructure projects will have a positive impact on other sectors, but hardly any standard has been set to prevent the completion of projects or increase in their estimated cost. Is.

The development of the infrastructure sector is essential to provide employment. It is not possible to create employment without the development of the infrastructure sector. But if we look at the past of independent India, the pace of infrastructural development is not as expected. Another reason behind this is the indifference in investment by the private sector. Due to local politics hindering land acquisition, delays in clearance, difficulty in obtaining funds, private investors are reluctant to venture into the infrastructure sector. In addition to delays in completion of projects, rising costs are a major challenge for infrastructure development. Over the last eight to ten months, steel and cement prices have risen sharply in the country, which has also pushed up project costs. In addition, the increase in fuel costs has increased the cost of transporting raw materials required for projects. The direct effect of which is being seen on the total cost of the projects. Steel prices in the country have risen by more than 50 per cent in the last ten months and are currently trading at an all-time high.

The Corona epidemic has had a devastating effect on the country's economic growth rate, while the government has been forced to accelerate infrastructure development to create jobs in the country and provide money for the cost in the hands of the people. In such a situation, it has become necessary in today's time to find new technologies for the development of infrastructure projects which do not increase the cost of completing the projects and ensure that they are completed on time.

The money required for private sector investment in infra projects was provided by the country's banks, especially by public sector banks, but the slow pace of project implementation led to delays in getting returns to developers through related projects. Not only did this lead them to shy away from investing in new projects, but also to the problem of non-performing assets (NPAs) in banks. This is why banks are no longer particularly keen on lending to private companies for infrastructural development. If the infrastructure projects had been started on time and completed within the stipulated time frame, the picture of investment by the private sector would have been encouraging and banks would not have come under stress.

While it is a well-known fact that political interference has undermined the health of banks, it has become necessary to ensure that there is no political interference in the operations of DFIs. In order to maintain the balance sheets of the newly formed DFI from the outset and speed up the infrastructure projects in the country, the government will have to reduce the problems and ensure that the operations of the DFI remain transparent.