The delays in execution of infrastructure projects lead to financial losses of Rs. 300-400 crore daily in terms of interest costs, according to India’s Minister of Road Transport and Highways and Shipping Nitin Gadkari.Addressing the inaugural session of the 4th International Summit on ‘Infrastructure Finance – Building for Growth,’ an event that was organised by the Associated Chambers of Commerce and Industry of India in New Delhi on December 1, Gadkari stressed on the need to fast track the decision-making process in the infrastructure sector in order to eliminate delays in execution of projects.
“My delay in taking decisions will result in India facing financial losses worth about 400 crore daily in terms of interest cost per day,” Gadkari said.
On the measures being initiated by the government to provide momentum to the road sector, he informed that projects worth about Rs. 1,80,000 crore that were previously stuck on account of land acquisition hurdles and clearance related issues had been streamlined. He added that 80 per cent of the issues relating to the Ministry of Environment and Forests were resolved.
Gadkari pointed out there were projects worth Rs. 5,00,000 crore which could be implemented in the public-private partnership mode. He emphasised, though, on the need to reduce the cost of construction as well as interest rates so as to improve the economic viability of projects.
“In the present scenario, if projects are financed at 13 per cent rate of interest then it will impact economic viability and will be a blockage in infrastructure development, thus there is a need to reduce interest costs,” he said.
Gadkari said that inland waterways should be promoted in place of road transport as the former was cheaper and a cleaner mode of transportation.
Meanwhile, Minister of State for Planning (Independent Charge) Rao Inderjit Singh recently informed Parliament that 295 infrastructure projects out of the 720 central sector infrastructure projects costing Rs. 150 crore and above faced delays with total cost overrun of Rs. 1,01,436 crore.
The original cost of the 295 delayed projects was Rs.5,48,838 crore while the anticipated cost totals Rs. 6,50,274 crore.
Out of the delayed projects, 62 projects face overall delay in the range of 1-12 months, 66 projects have delay in the range of 13-24 months, 98 projects have delay in the range of 25-60 months, and 69 projects have delay of 61 months and above.
Among the delayed projects, as many as 92 projects with total cost overrun of Rs. 1,975 crore belong to the road sector. The other delayed projects include 32 projects with total cost overrun of Rs. 46,766 crore from the railways sector, 43 projects with total cost overrun of Rs. 16,320 crore from the petroleum sector, 64 projects with total cost overrun of Rs. 12,874 crore from the power sector, 34 projects with total cost overrun of Rs. 10,242 crore from the coal sector, four projects with total cost overrun of Rs. 6,284 crore from the atomic energy sector, and 16 projects with total cost overrun of Rs.5,954 crore from the steel sector.