Infrastructure facilities like roads, ports and railways miss investment target

BANGALORE: Infrastructure facilities like roads, railways, and ports have under-achieved their investment targets in the Eleventh Plan by -11%, -23%, and -54% respectively, says Ernst & Young-FICCI report titled accelerating implementation of infrastructure projects.

"There is a need to change the way we approach infrastructure development. The change required is needed across planning, bidding and execution of infrastructure projects. More thorough and forward-looking project preparation and a sound land-acquisition process can go a long way in facilitating successful implementation of projects," says Abhaya Agarwal, Partner & PPP Leader, Ernst & Young,

Most infrastructure projects commissioned during the last two plan periods witnessed time and cost overruns of around 42% of the total number of 564 infrastructure projects in India, costing over Rs 1.5 billion. This has resulted in an average escalation of 16.9%, amounting to an incremental cost of Rs 1,207 billion.

"The Twelfth Plan focusing on attracting private sector to fund about 50% of the total infrastructure investment target, there is need to start both short term actions and long-term measures at the earliest," says Agarwal.

Further, private sector is finding it difficult to raise funds for infrastructure due to the aggressive investment targets set in the Twelfth Plan. "Setting up of Infrastructure Debt Funds (IDFs) and the reduction in withholding tax is expected to facilitate the flow of long-term debt into infrastructure projects," says Ernst & Young-FICCI report.

As per the report, there is need to prioritize action and reforms under the present conditions to facilitate increased private sector investments and faster execution of projects across the infrastructure sectors.