Centre may axe 116 infra projects worth Rs 1.26 trn lagging for decades

Land issues, Centre-State tussles caused delay, roads and railways have the highest share

Some 116 infrastructure projects worth Rs 1.26 trillion could be shut down due to unresolved obstacles ranging from land acquisition to Centre-state tussles. While these projects have incurred a cumulative capital expenditure of Rs 20,311 crore, the Centre is considering the possibility of finally putting a lid on them.

In an internal report prepared by NITI Aayog, the policy think tank of the government, these 116 projects feature in the list of those terminated, on hold, or bound for foreclosure. These may be removed from the Centre’s project-monitoring system, which has been created to expedite infrastructure execution.

Business Standard has reviewed the report.

“The majority of such projects are from the railways and roads sectors. While in the case of railways, 50 projects have been put on hold (some of them sanctioned 48 years ago) and 15 are yet to be sanctioned, the roads sector has 33 projects lined up for foreclosure, termination, or facing legal issues. Therefore, most of the sunk expenditure incurred is on railways and roads,” the report has found.

The ministries of Road Transport and Highways and Railways were allocated record-high funds in the Union Budget for FY23 to commence new infrastructure projects. However, the money sunk in such long-delayed projects is cause for concern in terms of fiscal prudence. Most of these delayed projects will have to be replaced by new ones despite sizeable infrastructure already in place.

Many projects continued to see cost escalation on account of delays until the respective ministries decided to draw the curtains on them. In the case of the stuck railway projects, their cost escalated by around 49 per cent to Rs 88,373 crore over the years, owing to the large number of them perennially put on hold. The Railways’ 72 projects have seen an expenditure of over Rs 8,500 crore so far. 

While road transport and highways saw 33 stuck projects, the cost escalation is lower at 6 per cent. However, these had a higher sunk cost than railways, at Rs 11,000 crore.

Land politics the biggest hurdle

As many as 55 of the 116 projects, either dropped or bound for shelving, have been stuck due to land acquisition issues between the Centre and states, and bureaucratic red tape. The ministries concerned have raised issues of state governments either not sanctioning the acquisition of land or not giving the requisite approvals, according to the NITI report.

Close to 10 projects have been stalled for years due to states reneging on their cost-sharing agreement. For example, the multi-state railways’ project to connect Ratlam and Dungarpur remained frozen because “the Rajasthan government has expressed inability to share the cost of the project”, even as the contract had already been awarded. There was a cumulative expenditure of Rs 191 crore. The Angamali-Sabarimala line was also held up after the Kerala government did not honour its 50 per cent cost-sharing agreement, after a cumulative expenditure of Rs 264 crore, according to the Railways.

In Telangana, the Hyderabad multi-modal transport system saw termination after a sunk cost of Rs 840 crore; over Rs 400 crore remains due from the state government.

 Environmental concerns

Two coal projects -- one each in Chhattisgarh and Madhya Pradesh -- may be shelved and removed from the monitoring system because environmental concerns remain unaddressed; there is a sunk capex of Rs 105 crore. Three projects of the National Highways Authority of India (NHAI) in Tamil Nadu, connecting the Kerala Border to Villukuri and Kanyakumari, have been stalled following environmental concerns raised by the National Green Tribunal (NGT). The projects are now proposed for shelving.

Several projects in ecosensitive areas in Northeastern states are set to be terminated, but no explicit reason has been provided for that.