Off track: India’s infra dreams plagued by delays and cost hikes

As the country races to build infrastructure to support its economic ambitions, persistent issues with land acquisition, project management and political interference cause rampant delays.

Hyderabad: While releasing a white paper on the Polavaram multipurpose project, considered Andhra Pradesh’s lifeline, Chief Minister N Chandrababu Naidu stated in June that delays in executing this ‘national project’ have meant that costs have inflated by 38 per cent. He estimated that the opportunity cost of lost crops and power was Rs 48,000 crore.

Construction for the project began in 1980, when former Chief Minister T Anjaiah laid the foundation stone. When the Y S Rajasekhar Reddy-led government came to power in 2005, he revived the plan.

Ever since, the project has encountered several obstacles, including cost overruns, changes in contractors and governments, and the Covid-19 pandemic. Incidentally, since the project began, a dozen chief ministers have been in office.

Over the years, the cost has risen from Rs 10,151 crore in 2009 to Rs 55,548 crore now. However, the Polavaram project, which received the national project status in 2014, following the state bifurcation, remains unfinished.

As India races to build world-class infrastructure to support its economic ambitions, a persistent problem continues to plague the sector: Rampant delays and massive cost overruns. 

Sample this: Last year, the Comptroller and Auditor General (CAG) report said that in Jammu & Kashmir alone, out of 374 identified project sites with a power generation capacity of 1,725 megawatts, only 10 projects, with just 79 MW capacity, had been commissioned with a time overrun ranging between four months and seven years.

The latest data from the Ministry of Statistics and Programme Implementation (MoSPI) paints a sobering picture as well — as of March 2024, out of 1,872 ongoing Union government projects valued above Rs 150 crore, 779 are running behind schedule

This chronic issue of time and cost overruns has been the Achilles’ heel of India’s infrastructure push for years. While the percentage of delayed projects has marginally improved, dropping to a three-year low of 41.59 per cent in March 2024 from 43.68 per cent in March 2016, the problem remains significant. The question is: Why does India struggle so persistently with executing large infrastructure projects efficiently?

A deeper dive into the MoSPI data reveals a complex web of factors contributing to these delays. The most common reasons cited include land acquisition issues, delays in obtaining forest and environmental clearances, lack of infrastructure support and linkages, financing problems, and contractual disputes.

The data shows that projects in sectors requiring large tracts of land, such as railways and road transport, are among the worst affected. The railways sector alone accounts for 127 out of 779 delayed projects, with an average time overrun of 52 months.

While delays are concerning, the magnitude of cost overruns is equally alarming. The 449 projects reporting cost overruns have seen their budgets balloon by an average of 20.7 per cent from their original estimates.

The cost overrun translates to an additional burden of Rs 5 lakh crore on the exchequer and project developers. 

The MoSPI report highlights factors such as underestimation of original costs, changes in foreign exchange rates and statutory duties, spiralling land acquisition costs and general price inflation as major contributors to cost escalations.

Deeper systemic issues exist in the conception, contracting and execution of infrastructure projects in India, going beyond the headline figures of delays and cost overruns. One major problem is the lack of robust project preparation.

Root cause

The reasons for project delays have remained consistent over the years, said Chandan Chowdhury, professor and executive director of Munjal Institute for Global Manufacturing and Punj Lloyd Institute of Infrastructure Management at the Indian School of Business (ISB).

Chowdhury and ISB students conducted a study titled, “Risk Mitigation in Road Infrastructure Project” and concluded that the root cause of project delay starts at the detailed project report (DPR) stage.

The ISB team studied six projects, two each from Kerala, Uttar Pradesh and Chhattisgarh.

“DPRs are mostly prepared by third-party consultants, who often submit ‘table estimates’ instead of the real on-ground data. Such shortcuts lead to conflicts between the concessionaire or contractor and the government. We have identified that minor changes in DPR conditions and payment schedules could result in mitigation of construction risks. We also believe that the responsibility of the DPR consultant should be throughout the lifecycle of the project and not merely up to the point of financial closure,” Chowdhury told DH.

Delays in project completion, in addition to cost overruns, can have significant consequences, he added. “The uncontrollable delay repels investors in our country, which affects the country’s overall growth,”  Chowdhury said. 

Urbanist V Ravichandar, based in Bengaluru, identifies that the rush in approving projects and adjusting its scope can lead to inordinate delays in urban centres. As projects are being executed, difficulties in terms of land acquisitions, court challenges, and scope changes happen. Further, at times, the winning bidder runs into financial constraints,” Ravichandar explained. 

The government’s belief that all development projects are for the ‘good of the city’ may also contribute to the problem. 

“To avoid congestion at one junction, the government tends to build a local flyover without making a complete study of the problem. What the administration is ending up doing is shifting one problem site to another junction,” he added. 

Each department prepares projects in silos and friction almost certainly emerges during implementation. “The Tendersure project was one of the few in Bengaluru where many departments were on board from the outset. Urban project implementation rarely achieves inter-departmental coordination,” Ravichandar said.

Land acquisition

In road and railway projects, a major cause for delay has been issues related to land acquisition and environmental clearances.

“In most cases, the governments or private players take communities that depend on the land for granted. They think that by hook or crook, they can evict or vacate the communities that ignite a conflict. The first step for project proponents should be to conduct an impact and risk assessment of land acquisition and to actively engage with the communities involved. After that, they can start preparing the actual project plan,” said noted human rights and environment activist from Andhra Pradesh Ganjivarapu Srinivas. 

Project proponents often do not actively engage with communities, instead, they attempt to sway their views and opinions. “Governments also have to build confidence in the case of compensation payments and packages otherwise communities do not cooperate. There are many projects in Andhra Pradesh where displaced people still await compensation even two or three decades after the completion of projects. With such examples in their notice, why would displaced people of new projects cooperate?” he asked. 

Srinivas, a participant in the International Visitor Leadership Programme on the environment, asserts that a shortage of skilled consultants is preventing the proper preparation of the mandatory Environment Impact Assessment, Environment Management Plan, and Social Impact Assessment reports. “These consultants, in many cases, often do a cut-and-paste job. They do not do real work on the ground, and often such projects are rejected for environmental clearances,” added Srinivas.

Politics also plays a role in the timely implementation of projects. A case in point is the Mumbai-Ahmedabad High-Speed Rail Project (MAHSRP) which was launched in 2017 and was originally scheduled to be completed by December 2023.

The project, having a 508 km long corridor, is now expected to be completed by December 2026. The Indian Railways blamed the Uddhav Thackeray-headed Maharashtra Vikas Aghadi (MVA) for delaying land acquisition, resulting in the delay. When rebel Shiv Sena leader Eknath Shinde became the Chief Minister in June 2022, the project received all clearances in Maharashtra.

Even the Dedicated Freight Corridor Corporation of India (DFC), which was supposed to be completed in 2020, is now expected to be completed by December 2025. The DFC was approved under the United Progressive Alliance (UPA)-I in 2006 and was originally scheduled to be completed in 2017. Interestingly, the first major civil contract for track construction for a stretch on the DFC was awarded only in 2013. Delays in land acquisition and financing arrangements have hindered commissioning. Due to the projects' slow progress, the railways continued to lose their logistics market share in the road sector.

Another example can be found in the elevated corridor project connecting Maduravoyal, a residential locality in Chennai, with the Chennai Port. The foundation was laid in 2009 by the then-Prime Minister Manmohan Singh. The plan was to complete the 19-km elevated corridor in six years at an estimated cost of Rs 1,468 crore. 

After fifteen years, the elevated corridor remains unrealised. Despite the immediate commencement of work, which included the installation of pillars along the 5-km Maduravoyal-Koyambedu stretch, the project faced a setback in 2011, following the DMK's defeat in the Assembly poll. The AIADMK government first opposed the project by citinga threat to the Cooum River and later scrapped it entirely. Upon regaining power in 2021, the DMK opted to revive the project, ultimately modifying the design to incorporate a double-decker road.

“The city underwent massive changes in 10 years, and it becomes quite difficult to tweak designs considering the migration to cities. Infrastructure projects should not be delayed at all, a senior official of the Tamil Nadu government told DH.

Apart from politics, experts also pointed out that Public Interest Litigations (PILs) can hinder project implementation as well. According to senior Karnataka High Court advocate Udaya Holla, there are a few genuine PILS, such as those filed to safeguard the Western Ghats. “More than 50 PILs have been filed with disruptive motives,” he said. 

He said the Supreme Court, in many of its observations, has said that PILs have turned into “Paisa Vasool Litigation.” “The courts have to be circumspect while allowing such PILs as they lead to delays in the implementation of projects,” he said.

Of all government infrastructure projects, projects in railways face the maximum delays and cost overruns, after roads. The Udhampur-Srinagar-Baramulla project in Jammu & Kashmir has recorded the highest delay — more than 20 years. According to railway officials, the project faced delays due to law and order issues and restrictions on mining, which stalled the construction of tunnels and bridges for several years.

Construction on the route also faced natural challenges due to its location along major earthquake zones and due to extreme temperatures and difficult terrain. Militancy and terrorism in the region are also among the listed reasons for delays.

The project, originally supposed to be completed in 2007, is expected to be officially commissioned by the end of this year. Initially estimated at Rs 2,500 crore, the cost has been revised to a staggering Rs 37,012 crore, with Rs 36,017 crore already spent.

Similarly, in Assam, the terrain and climate provide a unique crop of problems. A stretch of the East-West Corridor project in Dima Hasao has remained incomplete. The work on converting the roads between Shrirampur (Assam-Bengal border) and Silchar to four lanes was undertaken when Atal Bihari Vajpayee was the prime minister. Officials of the National Highway Authority of India cite the weather, difficulty in transportation of materials due to terrain and militancy activities in the past, as reasons why the work is incomplete. 

Delays in land acquisition and obtaining approval from the wildlife board and National Green Tribunal also caused significant delays in the railway projects in Karnataka.

In the South Western Railway zone alone, there are more than 25 railway projects awaiting implementation. 

Manjunath Kanamadi, chief public relations officer, South Western Railway, said projects are proposed based on the “greater benefit they could provide to the people.” “However, due to delays in land acquisition, court proceedings, and other issues, projects are getting delayed,” he said.

A former principal chief conservator of forests said that the Hubballi-Ankola railway was a monumental failure on the part of the forest department and the political class. “More than three lakh trees are expected to be cut in one of the most fragile ecosystems of the world for this project. The forest department and the railways are trying to implement the project without giving much thought to it. The new proposed alignment also passes through the forest area and will equally harm the ecosystem,” he said.

“The project should have never been proposed because of its environmental impact,” he said. 

(With inputs from Ajith Athrady in New Delhi, E T B Sivapriyan in Chennai, Sumir Karmakar in Guwahati, Pavan Kumar H in Hubballi, and Zulfikar Majid in Srinagar)