It is not something that is planned. It is grass roots corruption. I will give you a crazier example. In a large taluka (like a town) in South India in a very poor water scarce area, money for a particular stretch of road (20 km) is given every year. The contract always goes to the company owned by the local MLA (member of state assembly). They deliberately make a weak road which washes away in a year. Some of my friends have seen this happen 11-12 times in a year. They say nowadays at least the contractor makes some roads, 10+ years back the road would not be constructed and the funds withdrawn.

This corruption is lower in centrally funded large scale expressways because lot of data logging, monitoring etc. is done nowadays. Having said that execution with < 10% money being pilfered means a highly successful project.

Indian bureaucracy always finds a way to slow down any expenditure on public infrastructure, unless they manage to get something of it for themselves. The system is so well evolved in all cases, e.g. agri subsidies are only given to farmers who pay middlemen 10% of the amount in cash (which is actually a progress !). The money transfers is handled by middlemen and not by the Govt. officials themselves.

The only slow solution to reducing this corruption has been technology, cashless digital transfers etc. It will take another 10 years to reduce to 'acceptable' levels.