Soaring steel and cement prices have virtually put the brakes on the Pradhan Mantri Gram Sadak Yojana (PMGSY), the rural road component of the UPA?s flagship ?Bharat Nirman? programme. While rising input costs are affecting other road projects as well, rural road projects are worst-hit as contracts awarded under the PMGSY are fixed-price contracts with no room for price variations.

Responding to the fact that not many contractors have responded to new tenders and several contractors have preferred to exit ongoing projects mid-way fearing significant losses as the government would not permit any price escalation, the RD ministry is considering taking a relook at the pricing provisions.

Between January 2006 and May 2008, prices of cement went up 1.48 times, steel prices soared 1.56 times and bitumen rates rose by a whopping 1.94 times. During a review of Bharat Nirman projects last week, the rural development ministry has admitted that under the present circumstances it will not be able to complete the programme by 2009.

The ministry is working on a Cabinet note to allow changes in the approved cost of projects mid way to help finish the rural road scheme ahead of the general elections. To find a way out of the current quandary, the ministry has also set up a committee under principal secretary,public works department, Rajasthan, CS Rajan along with principal secretaries of departments handling the scheme in Assam, Maharashtra, Himachal Pradesh, Madhya Pradesh and Orissa. It is expected to submit its report next month.

More trouble Implementation of the programme has also been affected by a shortage of stone aggregates in some areas of Bihar, Assam , Tripura, West Bengal and Orissa. The states have been asked to augment supplies through better utilisation of existing sources and tapping new sources.

The government is also considering streamlining and simplifying the procedures for permits to ensure timely and adequate availability of inputs. It would further rationalise the high royalty charges for construction material charged by Assam , Maharashtra , Chhattisgarh, Haryana and Orissa.

The ministry has asked states with a high backlog of new connectivity projects to deploy enough dedicated programme implementation units (PIUs). The key states behind on this front are Assam (with 41% target achieved), Jharkhand (10% achieved), Uttaranchal (10% achieved), Bihar (14%) and West Bengal (22%).

Another critical factor affecting the scheme is non-availability of land. The ministry has suggested that the states should use the good offices of the Gram Panchayats and local revenue functionaries to overcome this constraint. In fact, even the PIUs have found it difficult, particularly in densely populated areas of Assam , Bihar , Madhya Pradesh, Orissa and Uttar Pradesh, to obtain possession of private land required for the project.

To ensure that forest clearances are available by the time projects are ready for execution, states have been asked to initiate pro-active upfront action for seeking these clearances as soon as the survey for preparing Detailed Project Reports (DPRs) commences.

The ministry has revamped the three-tiered quality control mechanism to make inspections more rigorous as well as transparent. The ministry claims that the incidence of ?unsatisfactory? works has declined by 10% in 2007-08.

State-level performance

A state-wise review of the PMGSY projects reveals that the programme has been implemented much better in non-Congress ruled states. BJP-run Rajasthan, Punjab and Gujarat , for instance, have achieved 95%, 85% and 74% of new connectivity projects in the state, respectively.

Congress-run Haryana has achieved nothing yet, while Jammu Kashmir has achieved only 4% of targets. While the Communist government in Kerala achieved 49% of targets, their comrades in West Bengal could only achieve 22% of targets.

In upgradation projects, the DMK-led DPA government in Tamil Nadu tops the charts achieving 99% of the target by March 2008. Surprisingly, West Bengal and Goa have achieved zero progress on this front, while Kerala, Jammu Kashmir have achieved a mere 10% of their targets.

On the other hand, nothing was achieved in the north eastern states of Assam , Mizoram and Tripura till March 2008. Meghalaya and Sikkim registered just 1% and 6% respectively while Arunachal Pradesh had no projects to be undertaken.

In states where the institutional capacity is weak and effective project implementation units cannot be set up, the ministry has sought the help of public sector undertakings. It is also supporting states in outsourcing project preparatory works and supervision of construction.

The Centre has also amended the standard bidding document for rural road projects to provide flexibility in package sizes, allow joint ventures and cut the upfront security deposit amounts. Performance incentives have also been weaved into the contracts to incentivise timely progress. In terms of clearing detailed project reports (DPRs) for rural road projects in their regions, however, the states are not to far from their targets. The only states lagging on new connectivity project DPRs are ? Jharkhand (34%), Bihar (36%) and West Bengal (39%).

While the Centre had set ambitious targets for its rural road projects by 2009, only 35 per cent of the targeted 59,536 habitations were connected and another 30% of the projects are underway to connect about 17,656 habitations by 2009.

Of the targeted 1,46,185 km new connectivity to be created between 2005-09, the government has been able to complete only 42% till March 2008, leaving just about an year to wind up the ambitious rural road scheme. Just 44% of the scheduled 1,94,130 km of rural roads have been upgraded from 2005-06 till 2007-08.

For 2007-08, the PMGSY was allocated Rs 11,000 crore, out of which Rs 2,600 crore was assistance from the World Bank and the ADB while Rs 4,500 crore was to come from the rural infrastructure development fund window of NABARD. Against this allocation, the PMGSY incurred an expenditure of Rs 6,372 crore (till December 2007). For 2008-2009, the PMGSY has been provided Rs 14,530 crore, out of which Rs 7,000 crore would come from NABARD.