Urban projects can get states grants if completed on time

To ensure that states are accountable for schemes on urban development, the 12th Five-Year Plan may provide incentive to states to turn their loans into grants if they complete certain portion of the projects on time.

The funds under this scheme will be transferred initially as a loan to the states and after successful completion of the pre-identified milestones in the said project, will be converted into grant. Officials said this would incentivise states to get projects completed in time.

The proposal mooted by the urban development ministry was discussed in a full Planning Commission meeting chaired by Prime Minister Manmohan Singh last month.

Recently, the Ministry of Statistics and Programme Implementation in a report said more than half of infrastructure projects implemented by the central government in 15 major sectors, which also included urban development, had been delayed leading to time and cost overruns. The urban development ministry has a strong involvement with states for executing projects under its purview.

The projects have been delayed due variety of reasons of which land acquisition problems contributed to maximum time and cost overruns, followed by slow progress in works other than civil works and fund constraints.

As in March 2010, almost 333 central infrastructure projects were delayed, leading to a cumulative cost escalation of almost 16 per cent, official data showed. The maximum number of projects —130 — were in the road transport and highways sector, followed by petroleum, railways and power.