By IANS,
New Delhi : Some 40 percent of road construction projects in India face cost escalations of 25-50 percent, even as corruption and the shortage of skilled labour may inhibit the sector’s growth over the next eight years, says the World Bank.
“The effectiveness of dispute resolution mechanism is another area of concern with $1.8 billion estimated to be locked in various disputes and arbitration,” says the bank in a new study on India’s road construction industry.
“Weak project and financial management and resource management are other areas that need attention,” adds the study released by co-author Arnab Bandyopadhyay, senior transport engineer with the World Bank.
The study says the supply of skilled human capital required by the construction industry will fall short by 55-64 percent and the number of engineers and diploma holders has to go up by at least a factor of three.
As per estimates, India today has around 110,000 highway engineers, which is in sharp contrast with China where over 500,000 trained highway engineers have been supporting road infrastructure development since 1989.
Among the suggestions recommended by the study to improve the Indian road construction industry and eliminate the hassles associated with inter-departmental coordination are:
-Mainstreaming the pre-construction process and clearances
-Setting up of an appellate tribunal to speedily adjudicate disputes
-Initiating a system on rating and registration of companies
-Framing a construction law to improve the legal and regulatory environment
The study says the industry has not kept pace with growth, as has been seen from the under-utilisation of funds allocated to road projects and perennial time and cost overruns on national and state highway projects.
It also shows that the outer limit of time extension for contracts in Britain is 25 percent, while in India, 70 percent of contracts exceed the limits and many of them by large margins.
“While capacity challenges in the industry are huge, certain recent initiatives taken by the government of India in improving the investment climate are very encouraging,” says Bandyopadhyay.
“Notable among these initiatives, fully coherent with the study recommendations, are decisions to undertake the international road shows and review the current model concession Agreement for national highway projects.”