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Translating investments into physical achievement continue to be a challenge - EY - India

Accelerating implementation of infrastructure projects

Translating investments into physical achievement continue to be a challenge

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It is likely that the critical segments of infrastructure, i.e. roads, railways and ports, have under-achieved their investment targets by 22% in the Eleventh Plan.

A bird’s eye view indicates that India has performed impressively by achieving its planned investment targets in infrastructure, which were set in the Eleventh Plan.

However, a closer analysis reveals that it is likely that overall investment targets have only been achieved due to the strong performance of the Telecom and Oil & Gas sectors.

It is likely that the critical segments of infrastructure, i.e. roads, railways and ports, have under-achieved their investment targets by 22% in the Eleventh Plan.

Investment shortfall in Road, Rail and Port sector

Investment shortfall in Road, Rail and Port sector

Achievement of physical targets has been hampered by multiple issues, which delay implementation of projects. Most infrastructure projects commissioned during the last two Plan periods witnessed time and cost overruns. Around 42% of the total number of 564 infrastructure projects in India has been delayed and around 31% were sanctioned without any fixed commissioning date.

Project status of 564 infrastructure projects as on May 2012

Project status of 564 infrastructure projects as on May 2012
This has resulted in an average escalation of 16.9%, amounting to an incremental cost of INR1,207 billion. Therefore, while these delays have partially bridged investment shortfalls, they have increased the gaps in the achievement of actual physical targets, resulting in a huge backlog.

Clearing the backlog along with the targets set for Twelfth Plan appears to be a challenging task, given the delays witnessed in execution of projects.

SectorNumber ofprojects delayedDelay period (inmonths)Cost overrun/Percentage escalation(INR billion)
Roads and transport782 – 10122 (8%)
Power471 – 83146 (12%)
Oil & Gas314 – 12083 (10%)
Railways272 – 204302 (137%)
Urban12452 (82%)
Coal179 – 4831 (27%)
Shipping and ports102 - 938 (10%)

 


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  • Adil Zaidi  
    Associate Director, EY
    011-4363 3230
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