It has been widely reported that India will invest between $350 and $550 billion on infrastructure projects over the next 5 years to transform connectivity and provide the platform for sustainable (and inclusive) growth. That’s up to 10% of GDP per year. Currently, this is running at 4.6% and stalling as the global crisis deepens. Let’s take a closer look.
First, the facts. The Indian Government has released information on the state of play for 2007-08: 207 of 516 projects of Rs 100 crore ($20 million) or more each are runnning behind schedule or face delays; 105 of 181 Highway projects are running late and a further 346 of 909 infrastructure projects valued at Rs 418,567 crore ($85 billion) are behind schedule. There are cost overuns totalling an estimated $5 billion on over 13% of these projects. And finally, K.H. Muniyappa, Minister of State for Road Transport and Highways, has confirmed that of 2885 kms of roads planned for 2007-08 only 114 kms have been completed. That’s 4% completion. By the way, over 130k people died on Indian roads last year and that is 60% more than China – with 4 x the number of cars. The World Bank has expressed concerns that their own investments are way behind schedule. What now? Is jugaad enough?
Reasons for delays and overuns include – land aquisition problems, environmental concerns, change in scope of projects and currency variations and cutting corners on materials used. For example, roads that are so badly surfaced that they are washed away in the monsoon – literally. However, experience from other countries highlights an overiding concern in all emerging economies. Telephone numbers are used to sum up ambitious infrastructure plans but where are the skills to ensure that such projects can come in on time and within budget? This is like planning to win the Premier League with guys from the local pub or, Twenty20 with a gulley team.
Where is the leadership with the ability to make sure that training budgets (always the first to go in a recession) are increased dramatically and not slashed? And what can be done to cut through the statistics, ignore the blame culture and really make things happen? Emerging and fast growth economies need a major injection of infrastructure skills and this cannot be left to learning on the job. By definition – this is too slow and, the equipment is scarce and costs a fortune. Hand a child the keys to a Ferrari; let someone learn violin on a Stradivarius!
Infrastructure skills are needed in the Public Sector as well as within Private contractors. This should be the imperative behind any of these infrastructure Plans. Let’s be clear – using NASSCOM (the lobby Goup for the IT industry) statistics of the 380,000 engineering graduates per year; 25% are unemployable without significant training and 50% are just umemployable. This is a low skills base to hit that $350 to $475 billion infrastructure target over the next 5 years…
Regular readers of this Blog will have seen the Last Mile Video. How many more projects look like this? How may opportunities to transform outcomes through Logistics are simply not moving? There are serious consequences for Foreign Investment and, in the current economic climate, no country can afford to lose out on a big slice from a smaller cake. So, what happens when a Plan misfires? For a start – given the fact that the Private sector is expected to generate an estimated 40% of the budget – what is the contingency plan to ensure that this is met that the current recession demands?