Monday, July 12, 2010

Challenges involved in Indian Highway projects

No one will disagree that India is growing rapidly. But infrastructure is seemingly failing to catch up with it. This is primarily due to a unhealthy mix of poor planning  and execution.The National Highway Development Programme and its poor vision are one of the major factors in abysmal conditions of highway infrastructure.

Costing for an infrastructure project like highways is a huge task consisting of a plethora of things that have to be taken into account.These include construction costs and costs of financing the project.The large scale diversity of India and the variety of conditions in different places makes it difficult to meet all costs. Government help and funding are needed to ensure smooth sailing.This cost borne by the Government is called Viability Gap Funding (VGF).So setting the VGF level is crucial in this respect. The right amount of funding is the need for the hour because the ups or down in the funding may give large scale problems either for the project or the tax-paying public.

The National Highways Authority of India (NHAI) has increased the funding from 20% of the total project cost to 40%.This increase hurts the tax payers whose money goes into the project.The way things are organised, if the project fails, most of the responsibility rests with NHAI which puts it at a lot unnecessary risks. The question is: Where will NHAI get this money from in the case a project goes south?

USSR failed miserably at implementing similar policies. For all practical purposes, India still has a backbone of these policies. Spending more than your budget to get something done is inadvisable. Everyone knows that it is a huge risk on an individual level itself.Imagine the whole country being at the risk due to  pathetic policies implemented by the Government.We can all learn from the failure of the Socialist system and plan our country’s policies in a fool-proof way.

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