How road construction projects have got affected due to stupidity
The enduring inflation is not only preoccupying the finance ministry but also hampering India’s growth story. General road construction project cost has jumped by almost Rs.1 crore for every kilometre due to the rise in input cost by 25%. This is mainly due to the rise in prices of steel and cement. Interestingly, inflation is not what is killing road development. For example, the government’s decision to liberalise international borrowing norms for companies will allow construction companies to raise credit up to $500 million. This may to a large extent fulfil India’s infrastructure investment demand of Rs.7,91,000 crore. This liberal dual-beneficial commercial borrowing will help companies to raise funds and fight inflation as well. What in reality is playing truant is allocation of funds. As per local municipalities, sufficient funds are not allotted to meet their demands and needs. The authorities need to understand that these frequent delays are hampering the growth story beyond calculation. The 5,846-km-long golden quadrilateral highways have already gone Rs.12,000 crores in excess. Projects under JNURM [that are largely affected] have the potential to revive urban India but are becoming bureaucratic hells.
One needs to learn from Public Private Partnership models like used in airports privatisation, telecommunications et al. Public projects needs to be modified and twisted to suite the public-private model. This will ensure projects meet deadlines and budget without compromising on quality! Sadly, in India, any world-class model is either criticised ad nauseum or is simply disregarded as a one-off wonder!
The enduring inflation is not only preoccupying the finance ministry but also hampering India’s growth story. General road construction project cost has jumped by almost Rs.1 crore for every kilometre due to the rise in input cost by 25%. This is mainly due to the rise in prices of steel and cement. Interestingly, inflation is not what is killing road development. For example, the government’s decision to liberalise international borrowing norms for companies will allow construction companies to raise credit up to $500 million. This may to a large extent fulfil India’s infrastructure investment demand of Rs.7,91,000 crore. This liberal dual-beneficial commercial borrowing will help companies to raise funds and fight inflation as well. What in reality is playing truant is allocation of funds. As per local municipalities, sufficient funds are not allotted to meet their demands and needs. The authorities need to understand that these frequent delays are hampering the growth story beyond calculation. The 5,846-km-long golden quadrilateral highways have already gone Rs.12,000 crores in excess. Projects under JNURM [that are largely affected] have the potential to revive urban India but are becoming bureaucratic hells.
One needs to learn from Public Private Partnership models like used in airports privatisation, telecommunications et al. Public projects needs to be modified and twisted to suite the public-private model. This will ensure projects meet deadlines and budget without compromising on quality! Sadly, in India, any world-class model is either criticised ad nauseum or is simply disregarded as a one-off wonder!
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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