In what belies the popular notion of a depressed investment environment in the country, the government’s spending on central sector projects commissioned in the first half of the previous financial year had risen exponentially, according to data obtained from the Ministry of Statistics and Programme Implementation (MoSPI).
In the central sector, India commissioned projects worth a record Rs 43,000 crore between April and September 2011-12, a whopping 250 per cent jump over the investment of Rs 17,835 crore in projects completed during the same period in 2008-09, which in turn was a 38 per cent rise over the amount spent in 2005-06. The three-year comparison results from the lack of corresponding figures for 2009-10 and 2010-11, as MoSPI publishes data with a huge lag.
The rising investment trend was also corroborated by data from the Centre for Monitoring Indian Economy released yesterday. The research body had said projects worth Rs 4 lakh crore were completed in 2011-12, the highest in the last few years. It had added the pipeline of outstanding projects, involving an investment of Rs 140 lakh crore, was large enough to allow the Indian economy to grow at a brisk pace, even if no new project was announced in the next five years.
Though there was a huge increase in investment, about 27 per cent of it was on account of the cost and time overruns accompanied with the completion of projects. The data shows Rs 12,793 crore of the Rs 43,000 crore of the government’s investment could have been avoided, had the projects been commissioned on time. When these were planned, the original cost of the 40 projects commissioned during the period was Rs 30,317 crore.
The MoSPI report covers 40 projects across the sectors of aviation, power, petroleum, road transport, shipping, railways, steel, telecom and urban development. These include power generator NTPC’s Rs 1,896-crore Farakka stage-III plant, Bharat Petroleum Corporation’s Rs 3,296-crore modernisation project, the National Highways Authority of India’s Rs 1,080-crore Bangalore section of the NH-4 project and Oil and Natural Gas Corporation’s Rs 3,600-crore pipeline replacement project commissioned between April and September 2011.
Experts agree there has been improvement in project execution lately. However, they attribute the trend to implementing agencies’ tendency to push investments to the second half of a financial year, a trend seen in the pre-2009 years. “The trend is definitely a reason to cheer. But until 2009, substantial expenditure was seen in the second half of a financial year. The high inflation in recent years is also a factor at play here,” said Amrit Pandurangi, senior director at consultancy firm Deloitte Touche Tohmatsu India.