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428 infra projects run into cost overruns

By IndianMandarins- 20 Jun 2022
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New Delhi (20.06.2022): A total of 428 infrastructure projects, each entailing an investment of ₹150 crores or more, have been hit by cost overruns of more than ₹4.98-lakh crore, according to a report by the Ministry of Statistics and Programme Implementation.

The report, quoting implementing agencies, says the delay in land acquisition, delay in obtaining forest and environment clearances, and lack of infrastructure support and linkages accounted for slow implementation and cost overruns.

Delay in tie-up for project financing, delay in finalization of detailed engineering, change in scope, delay in tendering, ordering and equipment supply, and law and order problems were cited as the other reasons.

The report also cited state-wise lockdowns due to Covid-19 as a reason for the delay in implementation of these projects. It also observes that project agencies have not been reporting revised cost estimates and commissioning schedules for many projects, which suggests that time/cost overrun figures are under-reported.

"Total original cost of implementation of the 1559 projects was ₹21,73,907.11 crore and their anticipated completion cost is likely to be ₹26,72,201.26 crore, which reflects overall cost overruns of ₹4,98,294.15 crore (22.92 percent of original cost)," the ministry's latest report for April 2022 said.

According to the report, the expenditure incurred on these projects till April 2022 was ₹13,50,610.98 crore, which was 50.54 percent of their anticipated cost. However, the number of delayed projects decreases to 525 if the delay is calculated on the basis of the latest schedule of completion. Further, for 619 projects neither the year of commissioning nor the tentative gestation period has been reported.

Out of the 647 delayed projects, 103 have overall delays in the range of 1-12 months, 111 have been delayed for 13-24 months, 314 projects for 25-60 months, and 119 projects have been delayed for 61 months and above. The average time overrun in these 647 delayed projects was 42.83 months.

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