The year gone by showed resilience and helped bring back some of the mojo that had faced the onslaught of the demonetisation and GST interventions. Large projects were cleared and several initiatives like RERA and PMAY helped new projects accelerate.
Samsung India inaugurated its Rs 50-billion factory of mobile phones, the world’s largest, completed in 24 months from the date of announcement. This consumer goods project was one of Make in India’s successes. In aviation, the much delayed Pakyong-Sikkim airport was completed, which was developed at a cost of Rs 6 billion with a cost overrun of Rs 4.5 billion and a time overrun of 81 months. Further, there was a sudden spike in completion of irrigation projects, especially in Madhya Pradesh and Uttar Pradesh. And Chhattisgarh, Punjab, Tamil Nadu and Madhya Pradesh saw the largest completion of road projects in recent times.
Projects worth Rs 4.4 trillion are scheduled to be completed in the quarter ended December 2018, and another Rs 2.6 trillion worth are scheduled for completion in the quarter ending March 2019. The accelerated pace of implementation seen in recent quarters could yield a higher completion rate in the second half of the year. This could take the total commissioning of projects to over Rs 5 trillion in the year, compared to Rs 4.9 trillion in the previous year, according to CMIE.
In fact, from April to September 2018, NHAI constructed, widened and strengthened 1,363 km of National Highways to four, six or eight lanes, which was 11.84 per cent lower than the target of 1,546 km for the period. But it recorded a growth of 22.79 per cent over the 1,110 km achieved from April to September 2017.
Considering the above, the pace of project execution is likely to remain hectic until the clouds of elections gather on the horizon by March 2019. The Union Budget to be declared on February 1, 2019, will be the last opportunity for the current Finance Minister to woo the voters with populist measures.
My column last month indicated the need for technology and project management in accelerating the pace of project execution, but our research on delayed projects this month shows that our record remains abysmal. Our Cover Story indicates that the average time overrun in 296 delayed projects (costing over Rs 1.5 billion) is over 48 months with a cost overrun of over 20 per cent! Huge resources are being lost owing to polity, bureaucracy and faulty planning. Given that we now need to prune our development schemes as we are stretching the fiscal deficit limits, there needs to be a tough law against cost and time overruns.
States are going to lead the growth from the front in times to come. Hitherto, Maharashtra and Gujarat have shown a strong ability to grow their economies.
But Tamil Nadu has trumped them all. Its top ranking among big states has been recognised by India Today and this state has the second highest GSDP with a CAGR of 9 per cent over the past decade. Similarly, Haryana and Kerala have improved as per numbers too. These states are now driven by the development agenda and will offer the best opportunities for growth in time to come. So come 2019, while we have our focus on the power swing at the Centre, the states are where the new sunrise of business opportunities will be.