The next govt is going to inherit unpaid bills worth Rs 12.4 lakh cr. Know why

When a government assumes charge, these bills will have to be added to the expenses incurred by the new projects and welfare schemes

New Delhi: A close analysis of a report released by CARE Ratings last month has shown that the government which assumes power after the ongoing General Elections will inherit a huge unpaid infrastructure development bill of Rs 12.4 lakh crore. After compiling infrastructure spends over the past five years, the CARE report pointed out the cost and time overruns for various projects in the last five years.

Fact-check

A total of 1,424 projects are currently under implementation. Out of these, 444 are mega projects with an outlay of over Rs 1,000 crore and these make up 80 percent of the total project spend. The anticipated cost of implementation for these Rs 1,424-projects is currently pegged at Rs 21.34 lakh crore. These projects were initially expected to cost Rs 18.17 lakh crore. However, in the last five years, Rs. 8.07 lakh crore or 37.8 percent of anticipated cost has been already incurred.

This means that a cost overrun of Rs 3.16 lakh crore has already been incurred.

Project completion has improved

The report showed that project completion, especially in sectors relating to power, roads, railways and petroleum accounted for most project completions (85 out of 101) by December 2018. This marks at least 50 percent improvement over the figures registered in the previous years, said CARE Ratings.

However, the incumbent government has left behind a total of 384 projects with pending bills worth Rs 12.4 lakh crore.

Why this matters?

While it is normal for projects to get carried over from the term of one government to another, this time it comes with burgeoning bad assets in the banking sector, mounting losses in the power sector and an economic slowdown. When a government assumes charge, these bills will have to be added to the expenses incurred by the new projects and welfare schemes announced by the political party that assumes charge.