Cost Overruns of Rs 4.77 Lakh Crore Observed in 417 Infrastructure Projects in September: Report

In a recent report released by the Ministry of Statistics and Programme Implementation, it has been revealed that 417 infrastructure projects, each involving an investment of Rs. 150 crore or more, are grappling with cost overruns exceeding Rs. 4.77 lakh crore in September this year. The report focuses on projects worth Rs. 150 crore and above and indicates that out of a total of 1,763 projects under scrutiny, 417 have reported cost overruns, and 842 projects are facing delays.

The original cost of implementing these 1,763 projects was Rs. 24,86,402.70 crore, and the anticipated completion cost is projected to be Rs. 29,64,345.13 crore, reflecting an overall cost overrun of Rs. 4,77,942.43 crore, which accounts for 19.22 per cent of the original cost, as stated in the latest report for September 2023.

The report indicates that the expenditure incurred on these projects till September 2023 amounts to Rs. 15,44,600.67 crore, representing 52.11 per cent of the anticipated project cost.

While the number of delayed projects decreased to 617 when delay calculations were based on the latest completion schedule, the report highlighted that for 298 projects, neither the year of commissioning nor the tentative gestation period has been reported.

Out of the 842 delayed projects, 194 face delays in the range of 1-12 months, 190 have been delayed for 13-24 months, 323 projects for 25-60 months, and 123 projects have been delayed for over 60 months. The average time overrun in these 842 delayed projects is 36.94 months.

Various reasons for time overruns have been reported by project implementing agencies, including delays in land acquisition, obtaining forest and environment clearances, and lack of infrastructure support and linkages. Other contributing factors include delays in project financing tie-ups, finalization of detailed engineering, changes in scope, tendering, ordering and equipment supply, as well as law and order problems.

The report also points out state-wise lockdowns due to COVID-19 (imposed in 2020 and 2021) as a factor contributing to delays in project implementation. Additionally, it notes that project executing agencies often fail to report revised cost estimates and commissioning schedules for many projects, suggesting that time/cost overrun figures may be under-reported.

ET