A few days ago, during a short window between the several waves of Covid swamping Delhi, we decided to take a short holiday somewhere in the foothills of Uttarakhand. As we drove through the backwaters of western Uttar Pradesh, the most visible impact of change were the roads.

In the bad old days, it used to be a bone-rattling drive to the terai from Delhi which used to take the best part of a day, peppered with car-sized potholes, crumbling bridges and an unending stream of slow vehicles, ranging from bullock carts and bicycles to produce laden tractors blocking the two lane ‘national highway’ for miles on end.

The awfulness of the drive was one big reason why I had become an enthusiastic fan of the Shatabdi trains introduced by the late Madhavrao Scindia when he was Railway minister. Compared to the tension filled road option, those clean, comfortable, air-conditioned and fast day connections between the capital and important towns in north India were a boon.

But things have changed. This time around, most of the stretch comprised smooth as silk expressways. Even the national highways were being frantically upgraded — perhaps because of the upcoming UP elections — but work was clearly ongoing at full steam, that too for tens of kilometres at a stretch. Gone were the days of half-finished works languishing for lack of money — that money was being spent lavishly was highly visible here.

The money is there

For people of my vintage, who grew up in pre-reforms India, this fact of there no longer being a crushing shortage of capital for everything takes some getting used to. As a country, while there is, and will always be, a shortage of adequate resources to meet all our aspirations, there is no longer any shortage of money if we want to get something done. For the Modi government, for instance, roads are important. They are also pretty good at getting them built, so this is a focus area. And projects in focus — like those in UP right now — are clearly not suffering from any shortage of money.

Today, if it is a question of finding a few thousand crore rupees to fund something of urgent importance — like the vaccination drive for instance, or ramping up bed capacity in hospitals within a few months — it is pretty easy for the government to find the funds from somewhere. We even have enough money to buy squadrons of fighter aircraft off the shelf. We no longer have to depend on foreign aid or development assistance to fund big projects. The government’s annual expenditure is now just shy of ₹40 trillion. That’s an ocean of money.

But just having the money isn’t enough. We need to be able to spend it effectively. And by effectively, I mean not only constructively but on time, so that the desired outcomes are achieved at the earliest. In asset creation as in justice, time is of the essence. Infrastructure delayed is infrastructure denied.

The big headline numbers in the current Budget, for instance, is the massive step up in capital expenditure. The capital expenditure outlay for 2022-23, at ₹7.5 lakh crore is a whopping 35.4 per cent higher than the Budget estimate of ₹5.54 lakh crore in 2021-22 and more than 2.2 times the spending outlay in the 2019-20 pre-pandemic Budget.

This is very good news. For the decade up to 2020, capital expenditure as a percentage of GDP remained more or less stuck around the 1.5 per cent mark. In the current Budget, taking into account Centre’s support to States, the effective capital expenditure is 4.1 per cent of GDP.

This is a staggering increase. The outcomes can be transformative if this is sustained. However, as past experience has shown, merely spending the money doesn’t mean that the desired ends have been achieved. The Ministry of Statistics and Programme Implementation, for instance, keeps tabs on the progress of infrastructure projects of ₹150 crore and above.

According to a recent report by MOSPI, of the 1,679 ₹150-crore-plus projects currently underway, 439 projects reported cost overruns and 541 projects were delayed.

Delay means money. With average delays running at 33 months or more, costs have shot up. The original cost of implementation has risen by over ₹4.38 lakh crore, almost a fifth of the original cost.

Execution, the key

This points to the one big stumbling block in executing the Modi administration’s grand infrastructure vision — the ability to execute. As any successful CEO or entrepreneur will tell you, having a great idea or innovation is only the start of the journey. Success entirely depends on execution.

It is to be noted here that these time and cost overruns would not have happened if the government had the ability to execute. Whatever be the flaws in the government’s planning process, once a plan is approved — and the budget cleared — the money is there.

But the government’s cumbersome tendering and purchase process, the long delays in funds and orders trickling down from the top to the project managers on the ground, as well as sheer inefficiency and massive corruption — all lead up to delays. It can take months from a budget being approved to money actually being released. This is the reason that Prime Minister Modi, an impatient man when it comes to execution, shifted the Budget presentation from the last day of February to the first, to give an extra month for this process to get completed before the next financial year actually kicks in.

The real challenge now is not in finding more money — a growing economy and a stable tax regime will see to that — but in improving the absorption capacity of the government. The decision-making process has to change radically. The long drawn out tendering process needs to be shortened and the dependence on L1 (the lowest financial bid) must make way for a more nuanced estimation of bids based on quality and speed of work.

Otherwise the grand infrastructure plan — remember the $2 trillion national infrastructure pipeline? — will end up as more numbers on a MOSPI report.

The writer is a senior journalist

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