Delays crippling infrastructure growth, cost overrun at Rs 1.47 lakh crore

New Delhi: A combination of factors including delay in regulatory approval, lack of funds and land acquisition issues are taking a toll on 115 mega infrastructure projects, which face a cost overrun of Rs 1.47 lakh crore.

The projects in question, each worth Rs 1,000 crore or more, are part of a total 339 across sectors such as power, railway and roads that were examined by the statistics ministry in August 2016.

"The total original cost of 339 projects was about Rs 10,91,090.86 crore and the latest reported anticipated completion cost is 12,38,844.26 crore, which reflects an overall cost overrun of 1,47,753.40 crore (13.54 per cent of the original cost)," said the Flash Report on Mega Projects for August 2016.

"During the last month (July 2016), the overall cost overrun for 329 projects was Rs 1,47,339.86 crore (14.19 per cent of the original cost)."

As per the report, the expenditure incurred on these till August 2016 stood at Rs 5,17,080.79 crore. Of the 339 infra works, 115 have seen a cost bump-up, which worked out to 114.13 per cent, while in July, it was 108.50 percent.

However, the number of projects reporting inflated cost fell to 33.92 percent in August, from 34.95 percent in July, it added.

According to the report, the factors at work as reported by implementing agencies are delay in land acquisition, forest clearance, supply of equipment, funds constraints, geological surprises, problems in setting up equipment, geo-mining conditions, slow progress in civil works, shortage of labour, inadequate mobilisation by the contractor, Maoist issues, legal cases and contractual hurdle and law and order, among others.

During the month under review, of 339 projects, 122 are delayed with respect to the original schedule and 7 have reported additional delay.

In August 2016, there are 116 projects that overshot schedule by more than 6 months and 113 with a higher cost of more than Rs 100 crore, and 45 projects have both time and cost overruns of more than 6 months and over Rs 100 crore, respectively.

The report further stated that out of the 339, 3 projects are ahead of schedule, 74 on schedule and 122 delayed. A total of 115 projects reported a cost spike and 46 saw both time and cost overrun with respect to their original project schedule.

It has been observed that the project agencies shy away from reporting revised cost estimate and commissioning schedule for many projects, which suggests that the time and cost overrun figures may have been under-reported.