BJP's mega infra push: Onus on new government to avoid time, cost overruns

BJP's mega infra push: Onus on new government to avoid time, cost overruns

Sanjay JogUpdated: Wednesday, October 16, 2019, 07:40 AM IST
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The ruling Bharatiya Janata Party (BJP) believes in setting high and ambitious targets. In view of rapid urbanization and the constraints on agriculture, the party, after being voted to power, has promised to invest a whopping Rs 5 lakh crore for the construction of basic amenities and infrastructure, such as irrigation facilities, roads, urban infrastructure, metros, railways and airports, between 2019 and 2024. This is in addition to the investment of almost Rs 5 lakh crore or more proposed by the BJP-led government during 2014-19, with the launch of a slew of projects which are currently in various stages of development.

The Rs 5 lakh crore projects being implemented by the BJP government led by Chief Minister Devendra Fadnavis include the Metro projects in Mumbai, Thane, Nagpur, Pune and Nashik, the Mumbai-Ahmedabad bullet train, the trans-Harbour link connecting Sewri-Nhava Sheva, Navi Mumbai airport, the ai-Nagpur Samruddhi Corridor, expansion of the Mumbai-Pune expressway, the construction of 21,000km of roads through a 'hybrid annuity model', completion of long-pending irrigation projects and the development of airports in districts to promote regional air connectivity. The Rs 12,000 crore Mumbai coastal road project has been currently stayed by the high court until further orders. The state has incurred the highest expenditure on irrigation in this period.

Despite the repeated claims of Fadnavis and his party, most of these projects are running behind schedule due to procedural and environment issues. Clearly, these were needed to ease the burgeoning burden on the existing infrastructure and also because of urbanisation. As per the National Census 2011, Maharashtra has the highest urban population of 5 crores and it is rising, at the rate of about 10 lakh per annum. It is envisaged that by 2022, the state's population of about 13 crores will be urbanised.

KMPM India, one of the leading providers of risk, financial services and business advisories, internal audit, corporate governance, in its recent report, had emphasized the need to improve urban service delivery in Mumbai and Pune and also simultaneously focus on decongesting Mumbai, Pune and Nashik, by promoting new urban centres by developing necessary transport and economic infrastructure.

Most of these projects are being developed by state undertakings, including the Mumbai Metropolitan Region Development, the Maharashtra State Road Development Corportion, the City and Industrial Development Corporation and the Maharashtra Airport Development Corporation, through cash transfer basis or by raising loans from agencies like the Asian Development Bank or the Japan International Cooperation Agency and also from Indian banks and financial institutions. Besides, for irrigation projects, the loan is being mobilised from the National Bank for Agriculture and Rural Development (NABARD).

A major challenge before the new government though, will be to complete ongoing projects without time and cost overruns and pay proper attention to carrying out a slew of new infrastructure projects by putting in place necessary approvals in advance and taking all stakeholders on board. The first phase of the Navi Mumbai international airport is expected to be commissioned in May 2020, and not December 2019, as also the 33km-long Mumbai coastal road whose fate hangs in the balance due to legal battles.

Further, the onus is on the new government to carry all stakeholders together to avoid controversies similar to the one that erupted following the Mumbai Metro Rail Corporation's decision to cut over 2,000 trees in the thick of the night, hours after the Bombay High Court's refusal to stay the tree-cutting. Mumbaikars protested at the haste with which it was done and finally, the Supreme Court has stayed further tree felling till October 30.

The state economy of Maharashtra, however, has been growing at a steady pace. The industrial sector has expanded at an impressive rate in the tenure of 13th state assembly (FY15-19). Despite sustained revenue deficit over the years, the fiscal deficit has remained well within the FRBM target while the debt levels are also sustainable.

Against this backdrop, the new investment in infrastructure is welcome but government will also have to equally pay additional attention to revenue mobilisation and cut administrative expenses. Further, the government cannot go on giving guarantees to undertakings for borrowings, in view of its own financial constraints. In addition to this, the determination of fare structure and toll rates will have to be done cautiously, to avoid public wrath. This is necessary as the fare revision for the 11.4 km Versova-Ghatkopar metro project is locked in a legal battle, as the operator continues to incur heavy losses.

The credit ratings agency CARE, in its latest report, has pointed out that infrastructure in Maharashtra has seen marginal improvement in terms of road, railways, telecom and power (2014-19). ''The state’s focus on asset creation has moderated. On an average, the capital outlay accounted for 10% of the total expenditure during FY15-19, lower than the share of 12% in the total expenditure during FY10-14. However, stalled investments in the state have increased nearly three-fold, from Rs.3.5 lakh crore during FY10-14 to Rs 10.8 lakh crore during FY15-19, on cumulative basis,'' CARE said.

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