The government’s ambitious Bharat Nirman project to develop rural infrastructure, at an initial project cost of Rs1.76 trillion, is running two years behind schedule and is now expected be completed only in 2011.

The project was conceived in 2005 and was to be implemented in four years to provide rural India with irrigation, roads, water supply, housing, electrification and telecom connectivity.

“At the current pace, it looks like the targets under housing and rural telephone connectivity could be achieved by 2009. According to Planning Commission estimates, achievements under other four other components are likely to extend by one or two years," said a senior Planning Commission official associated with Bharat Nirman project, who did not wish to be identified.

The worst performance has been with respect to irrigation and roads, where only 20% of the targets were achieved by March. In the case of drinking water and electrification, the performance was just marginally better with 75% of the targets yet to be realized.

The project was to be financed through a combination of market borrowings, external assistance and additional gross budgetary support and spending by state governments.

The government is now planning to mobilize additional funds to absorb the resulting cost overrun. For instance, under the Accelerated Irrigation Benefit Programme, it is doubling the allocation of Rs3,580 crore in the current fiscal. It was expected that the project would create 10 million hectares (mha) of additional irrigation capacity by March 2009. Only 2.1mha had been created by the end of this March.

“We expect the additional allocation through the supplementary budget to be announced next month," said Rajeeva Ratna Shah, member secretary at the Planning Commission.

Similarly, for roads, the Centre has created, from April this year, a special window of credit with the National Bank for Agriculture and Rural Development to provide Rs16,500 crore loans to states for building roads. The Centre had cumulatively invested Rs10,451 crore in the last two years on roads. But at the end of this period, the government was able to extend rural roads to only 18% of the rural habitations and build only 26% of the target for new rural roads.

Again, under a rural electrification scheme dubbed Rajiv Gandhi Grameen Vidhyutikaran Yojana, the shortfall has been stark. The project was able to provide electricity to only 0.3% of the 2.3 crore households below the poverty line and provide electricity to just 31% of 125,000 villages.

An economist with ABN Amro Bank, who didn’t want to be named, said that while there is vigorous road-building activity across the country, progress in electrification may be much slower due to systemic problems in the sector.

“Maybe in the case of roads, the targets were a little too ambitious and therefore are not being met," he said. “With electrification, India has always had a problem. I cannot be sure what delays Bharat Nirman’s electrification process, but everything from contracting to user charges to transmission, distribution and generation has always been rather slow here."

The projects under Bharat Nirman are to be jointly pursued by the Centre and states with the bulk of the funding to be raised by the states. According to the Planning Commission, a large number of states, such as Maharashtra, Andhra Pradesh, Karnataka and West Bengal have been slow in implementing projects related to irrigation, drinking water, electrification and roads.

The Planning Commission official added that the reason for slow achievement in drinking water projects has been the absence of proper contracting agencies, the lack of states’ motivation towards the programme and time required for awarding the contracts.

The Committee on Rural Infrastructure, headed by Prime Minister Manmohan Singh, monitors Bharat Nirman.

According to Ramesh Ramanathan of Janagraha, a non-governmental organization, there is no getting away from large state-sponsored projects in a country as vast as India. “The government should install structures like project monitoring units and standardize tender documents in order to reduce cycle time for projects," he said.