Monday, March 02, 2020

Infrastructure cost and time overrun.

"The first half of 2019 saw a marked acceleration in government spending on infrastructure projects," wrote Rangoli Agrawal. Lok Sabha election was held in May 2019, which was won by Prime Minister Narandra Modi with absolute majority. This year's budget has allocated Rs 1.7 trillion for infrastructure projects. However, time and cost overruns are routine, especially in road transport and highways, power, railways and petroleum projects which " account for about three-fourths of the total spending". "While the cumulative cost overrun in major projects is 4.5%, it is 26.5% in mega projects". In financial years 2104-19 "only 55% of the total awarded length of roads was constructed". "The Union budget has set a fiscal deficit target of 3.5% of gross domestic product (GDP) in 2020-21, as against 3.8% in 2019-20," wrote Prof Alok Sheel. Assuming a tax buoyancy ratio of 0.65, this year's deficit will be 3.7%, and not 3.5%, of GDP. To keep to its target the government has to cut expenditure. The outlays on agriculture and rural development is to grow by 13.4% in 2020-21, as against 34.8% in 2019-20, while the outlays on IT, telecom, transport and urban development "are projected to grow by 28.9% in 2020-21, compared to an estimated 8.7% in 2019-20". The rural poor will suffer. Worse might be on the way. "Last month Pakistan declared a national emergency over locusts," wrote Nitin Pai. Several districts in Gujarat and Rajasthan were attacked but the swarms "headed back towards Sindh and Balochistan". Unfortunately, "The immediate concern is that by June 2020, there will probably be extraordinarily large swarms in India, and that these could overwhelm the country's current capacity to control them." Where do they come from? An entomologist Sir Boris Uvarov discovered  that "Locusts and grasshoppers were the same species, but under stressed conditions of drought and diminishing food, grasshoppers laid eggs that became locusts," wrote Vikram Doctor. "Locusts were a life phase of grasshoppers that could swarm and fly far off in search of food and, when this was found in abundance again, future generations could revert to being solitary grasshoppers." Infrastructure spending is meant to create jobs and increase investments, but the most important infrastructure has to be education. "Ten years after the Right to Education Act came into being, nearly 40% of adolescent girls in the age group of 15-18 years are not attending school while 30% of girls from poorest families have never set foot in a classroom, according to status report." So much money for ineffective infrastructure. Sadly, locusts don't need infrastructure. 

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