politics

Modi's Flagship India Projects Starved for Cash, Report Says

  • Smart Cities initiative spent just 1.8 percent of allocation
  • Parliamentary report says India must ‘get its act together’

Indian Prime Minister Narendra Modi

Photographer: Jason Alden/Bloomberg

India’s flagship government initiatives have barely spent any of the money allocated to them, a parliamentary committee has reported, raising questions about the on-the-ground implementation of Prime Minister Narendra Modi’s most high profile national programs.

Although India’s government insists the figures are wrong, a report from the parliamentary standing committee on urban development said Modi’s six top infrastructure initiatives spent on average just 21 percent, or $1.2 billion, of the $5.6 billion allocated.

India’s "Smart Cities" program, which Modi has championed, used just 1.8 percent of the funds released to it, the committee said, or just $28 million of a dedicated $1.5 billion. Other programs to build affordable housing, as well as sewage and drainage facilities, used less than 30 percent of the available funds, the report said.

The central government releases funds to India’s states to roll out the initiatives, but the committee said India’s Ministry of Housing and Urban Affairs had "not made realistic projections or proper planning." Despite the ambitious-sounding goals of some of the programs -- such as providing "housing for all," or ending "open defecation" across India -- they suffer from a lack of proper funding, as well as "slack implementation," the committee said.

"They’re coming up with all these grand schemes," Pinaki Misra, an opposition lawmaker from a regional party and chair of the standing committee, said in an interview. "Too much has been promised, by way of too many projects, with too many fancy acronyms, that haven’t really been thought through."

Official Spending

The government rejects that view. The small spending amounts in the report don’t accurately reflect construction work being done, said Rajeev Jain, a spokesman for the housing and urban affairs ministry.

Funds are only considered officially spent once all the work is completed and project managers have sent back "utilization certificates" proving they have spent the cash, Jain said, adding project managers have up to two years to do so, leading to delays.

"It’s not a barometer of the implementation of the project," Jain said. "The payment to a company that is implementing a project is only made when the work is completely over."

So far, $3.7 billion worth of projects have been "completed or started," Jain said.

‘Meager Funds’

Misra, who leads the urban affairs standing committee, said the ministry was "trotting out the usual excuses" by blaming bureaucratic delays in accounting for spent funds.

"It’s an age-old gambit when the center doesn’t want to release funds because they don’t have funds," he said.

InitiativePurposeFunds releasedFunds spent
Swachh Bharat, or Clean IndiaPromotes clean streets and toilet-construction to end "open defecation"$899 million$341 million
Smart CitiesCity improvement projects$1.5 billion$27.9 million
Atal Mission for Rejuvenation and Urban Transformation (AMRUT)Upgrading water, sewer, drainage infrastructure$1.3 billion$381 million
Pradhan Mantri Awas Yojana - Housing for allAffordable housing for the poor$1.5 billion$319 million
Deendayal Antyodaya Yojana - National Urban Livelihoods MissionSkills training for urban poor$233 million$130 million
Heritage City Development and Augmentation YojanaConservation of heritage cities$38 million$5 million

The parliamentary report warns that Modi’s "well-meaning" projects "will remain a distant dream" if they receive only "meager" funds.

In India, where the central government must cooperate with the states, "national transformative projects" such as Modi’s smart cities and Clean India initiatives will take time to implement, said Jaijit Bhattacharya, a consultant and adjunct professor at the Indian Institute of Technology Delhi.

The smart cities program involved a competition supported by Bloomberg Philanthropies, which was started by Michael R. Bloomberg, founder of Bloomberg News parent Bloomberg LP.

"One cannot pass a diktat forcing people to use toilets. It has to be through persuasion, and that takes time," Bhattacharya said. "However, it is also important that the government machinery actually implements the projects in an honest manner. It is too early to note whether the projects are getting implemented appropriately."

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE