Cost overruns amidst delays bog infra projects

Siddharth Tak/ Zee Research Group

India’s efforts to fill the yawning infrastructure deficit have met with little success with almost half of government projects running behind schedule, often leading to heavy cost overruns. About 81 per cent road, transport and highways sector projects stand delayed, making it among the worst hit.

An analysis of the data tabulated by the Ministry of Statistics and Programme Implementation revealed that as of April end this year, out of 560 total infrastructure projects, 251 projects were delayed. These projects are in the Rs 150 crore or more category. The ministry report was compiled during August this year.

The ministry ran up a list of all delayed projects which included road transport and highways, power, and railway sector projects. Of the 119 road and highways projects listed by the ministry 97 were running behind schedule. A total of 44 projects got delayed in the power sector with 22 projects running behind schedule each in coal and railway sector, respectively.

The mapping of the projects showed that the politically sensitive northeastern states have been worst hit followed by Naxal infested states of Andhra Pradesh and Bihar in terms of projects getting delayed there.

With regard to cost overruns, Maharashtra projects observed a cost overrun of Rs 10,476 crore due to the delay followed by Delhi at Rs 10,199 crore, and Jammu and Kashmir at Rs 10,162 crore.

A state-wise perspective revealed that while Assam, Andhra Pradesh and Bihar did not complete a single project, Maharashtra and Tamil Nadu completed half of their projects by April-end this year.

Parvesh Minocha, managing director, Feedback Infrastructure, an infrastructure consulting company, said, “Delay is caused due to inadequate planning, land acquisition, and regulatory clearances from railway, environment and forest departments.” br>

This further led to poor implementation on the ground, said Rajashree Murkute, senior manager at CARE Ratings. He argued, “The economic inefficiencies arising out of below average road network in most parts of the country have resulted in an increased time lag in transportation of commodities resulting in higher costs.”

Dwelling on delays’ impact on costs, Manish Aggarwal, infrastructure practice head at KPMG said, “Funding of cost escalations often lead to further delays as the lenders are not willing to fund the same and the developers have to infuse more equity and arranging finances for aggressive bids also becomes a challenge.”

The ministry report does not pin blame on anyone for the delay. However, Murkute was more forthcoming. “Lack of cooperation from local and state authorities has resulted in project delays in states like Maharashtra,” he said.

As regards solutions to end delays in project implementation, Aggarwal said, “The National Highways Authority of India might like to bring in stringent land acquisition measures including ensuring 100 per cent land acquisition well before the project is bid out and to incorporate stringent penalties around non-delivery of projects by developers as per prescribed timelines.”

Minocha argued for a single window clearance at state and Centre level for speedy implementation of projects.

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