Central government infra projects face record Rs 5.5 lakh crore cost overruns, Indian Railways hit hardest – Infrastructure News

The Ministry of Statistics and Programme Implementation (MoSPI) has revealed cost overruns exceeding Rs 5.5 lakh crore in 448 infrastructure projects in April 2024. Notably, the ratio of cost overruns in central government projects surged to a 12-month high of 20.09 percent in April, up from 18.65 percent in the previous month. Out of the 1,838 projects assessed, 448 reported cost overruns and 792 experienced delays.

The original cost of these 1,838 projects, each valued at Rs 150 crore or more, was Rs 27,64,246.50 crore. However, their anticipated completion cost is now projected at Rs 33,19,601.84 crore, marking an increase of Rs 5.6 lakh crore over the original estimates. The MoSPI report also noted that the number of delayed projects decreased to 514 when calculated based on the latest completion schedule.

Among the delayed projects, 220 experienced delays ranging from 1-12 months, 192 were delayed for 13-24 months, 259 for 25-60 months, and 121 projects faced delays exceeding 60 months.

Despite these setbacks, 61 projects were completed in April, while 29 new projects were initiated. The cost of completed projects in April was Rs 46,649.7 crore, while the newly added projects had an estimated cost of Rs 1.3 lakh crore. The average time for project completion in April decreased to 35.4 months from 36.04 months in March. However, 48 percent of the projects experienced delays of over two years.

The government’s focus on infrastructure development, highlighted by international agencies as a key driver of growth, is expected to continue in the coming year. However, despite government’s continuous efforts to streamline project execution, the data reveals significant challenges in achieving timely and cost-effective infrastructure development.

Railways faces over 126% cost overruns

Among major sectors, the railways faced the highest cost overruns at 126.5 percent in April, with over half of its projects experiencing cost overruns. The road transport and highways sector, which accounts for nearly 60 percent of the projects, had a cost overrun ratio of 23.7 percent. Additionally, one-third of railway projects and over 10 percent of road projects faced time overruns.

Reasons for these time overruns, as reported by various project implementing agencies, include land acquisition, environmental clearance, financial issues, contractual and internal issues, manpower shortages, and litigation.