India misses targets for most sectors in Apr-Aug

India misses targets for most sectors in Apr-Aug

New Delhi: The country has missed its targets across all major sectors such as power, coal, finished steel, roads, railways and petroleum despite the Centre’s continued push, discloses government data.

An August review of the infrastructure sector performance for the April-August period, brought out by the ministry of statistics and programme implementation, suggests that most sectors, barring refinery production, failed to meet targets.

“It is very difficult to assign particular reasons to targets not being reached, but this is the factual position. The causes for not meeting targets vary from sector to sector," says Pronab Sen, chief statistician of India. He insists that the targets set by the government were realistic and had been set in consonance with relevant project authorities.

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Mint had reported on 13 August that at least half the infrastructure projects being executed by the government in vital areas such as atomic energy, railways, power, telecom and petroleum, have been delayed, resulting in a cost overrun of at least 10%.

According to the Flash Report on Central sector projects released by the same ministry, as of March, 234 out of 515 Central projects—each estimated to cost Rs100 crore and above—had been delayed from their expected date of commissioning.

The ministry presents these reports to Prime Minister Manmohan Singh and the cabinet secretary, besides informing respective ministries about the performance of projects related to them.

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During April-August, highways regulator National Highways Authority of India widened and/or upgraded 990km of highways against the target of 1,014.17km.

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“The problem faced by the highways sector is in respect of fresh awarding of tenders," said Nirmaljeet Singh, additional director general at the ministry of shipping and road transport. He, however, defended the sector’s progress, saying: “There is a reasonable degree of progress in works that are under construction."

Experts also say infrastructure projects in some sectors, such as roads and airports, have been delayed due to a variety of reasons, including court cases over guidelines governing the tendering process. These delays, coupled with the current liquidity crisis, might make raising more money in the sector difficult.

Credit rating agency Crisil Ltd, an arm of ratings firm Standard and Poor’s, in a recent report said $390 billion (Rs18.56 trillion) of investments in infrastructure in the next five years starting 2007-08 would be a more realistic target.

The government projects investments of around $500 billion over the same time period, of which at least 30% should come from the private sector. The infrastructure sector typically works on a 7:3 debt-equity ratio.

“Going by the government’s projects, I don’t see $45 billion of equity money appearing in this economy," said Jayant Desai, director (transactions advisory services) for Ernst and Young. “In the power and roads sectors, land acquisition is a major problem. Also, companies are reaching sectoral limits (limits capping bank lending to by sector) or group exposure limits." Desai added that there was “no way" the government would achieve its projected investment levels.

Refinery production remained the one bright spot.

“The overall refinery production during April-August 2008 at 67.77mt (million tonnes) was higher than the target for the period and the production for the corresponding period of the previous year by 7.3% and 4.8%, respectively," says the report.

However, according to the report, the production of crude oil during April-August at 14.02mt was 4.4% lower than the target. It was also 0.9% lower than the output for the corresponding period in 2007.

This was largely on account of lower-than-anticipated production by the Oil and Natural Gas Corp. Ltd in Assam, Gujarat and Andhra Pradesh, as also by private players in the oil sector, the report said.

K.P. Narayana Kumar contributed to this story.