The role of the government in economic activity has come down substantially in the past two decades. Yet, critical areas of the economy, entirely or in part, remain the responsibility of the state. The Indian state’s inadequacies with regard to execution and implementation could, therefore, hobble the nation in its onward journey.
There is plenty of evidence, both anecdotal and structured, about schools without teachers, huge village clusters devoid of power, primary health centres ailing without medicines and trained doctors, roads that end before they reach anywhere and fair price shops diverting more grain than they dispense. Unfinished irrigation projects, too, make for a sad commentary. The state’s inability to deliver, despite its propensity to spend on these heads, means that inclusive growth will continue to elude us.
Many of the projections of our future, by which the world has started to define us, assume a proactive and efficient state. A GDP growth trajectory of 8-9%, while derived from a combination of savings rate, efficiency and productivity ratios, takes for granted that infrastructure will not be a binding constraint. Growth is predicated on the belief that the state will build adequate roads, ports, power plants and so on, in the stipulated time, to support enhanced economic activity.
The so-called “demographic dividend” that India looks to reap would amount to nothing without education and basic technical skills for all. A higher proportion of youth, if unemployable, will be more of a curse than a blessing.
The Union government monitors the progress of its projects, which require an investment of over Rs20 crore. Its last full-fledged report, in September 2006, shows that of the 860 projects being monitored, as many as 293 are behind schedule. This, after deadlines were extended for many of them. More disconcerting is the fact, pointed out in the report, that for another 232 projects, no completion dates have been indicated at all!
There is too much at stake. Investment in these 860 projects is envisaged close to a mind-boggling Rs385,000 crore. Of this, over Rs145,000 crore has already been spent. More important, they are in crucial sectors such as roads and highways, railways, power, urban development and telecom, where corporates and civil society are looking to the state to deliver, and to do it quickly.
This is the state of projects controlled by the Centre. State governments are responsible for separate sets of projects in areas that are at least as critical: Education, health care, gender and rural development, apart from roads, power, irrigation and others. Their record is more dismal.
Clearly, it is non-performance on a massive scale. The loss in financial terms is significant, but even more in terms of its long term implications on our people and our growth story. Yet, we are unable to resist the temptation to announce and embark on new projects.