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

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

In April 2024, 448 infrastructure projects had cost overruns surpassing Rs 5.5 lakh crore, according to the Ministry of Statistics and Programme Implementation (MoSPI). Notably, from 18.65 percent in March to a 12-month high of 20.09 percent in April, the ratio of cost overruns in central government projects increased significantly. Of the 1,838 projects evaluated, 448 reported delays and 792 cost overruns.

These 1,838 projects, each worth at least Rs 150 crore, had an initial cost of Rs 27,64,246.50 crore. Nevertheless, their estimated completion cost has increased by Rs 5.6 lakh crore from the initial estimations to Rs 33,19,601.84 crore. The MoSPI report also stated that, when computed, the number of delayed projects dropped to 514.

Of the projects that were delayed, 220 took one to twelve months to complete, 192 took thirteen to twenty-four months, 259 took twenty-five to sixty months, and 121 took longer than sixty months.

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In April, 29 new projects were started and 61 existing projects were finished in spite of these setbacks. The newly added projects were anticipated to cost Rs 1.3 lakh crore, while the finished projects in April came with a cost of Rs 46,649.7 crore. In April, the average time to complete a project dropped from 36.04 months in March to 35.4 months. However, delays of more than two years were encountered by 48% of the projects.

It is anticipated that the government would continue to prioritize infrastructure development in the upcoming year, as noted by foreign agencies as a critical growth driver. However, the data shows that there are substantial obstacles to accomplishing timely and cost-effective infrastructure development, even in spite of the government’s ongoing attempts to simplify project implementation.

Over 126% of railroad costs are exceeded.
With over half of its projects incurring cost overruns, the railways suffered the greatest rate of cost overruns among key industries in April, at 126.5 percent. The cost overrun ratio for the road transport and highways sector, which makes up almost 60% of the projects, was 23.7%. Furthermore, time overruns occurred in over 10% of road projects and one-third of railway projects.

Reasons for these schedule overruns, as stated by various project implementing agencies, include land acquisition, environmental clearance, financial challenges, contractual and internal issues, staffing shortages, and litigation.

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