Infrastructure projects in India, each requiring an investment of Rs. 150 crore or more, have reported cost overruns of over Rs 4.80 lakh crore in May 2023, according to a recent report by the Ministry of Statistics and Programme Implementation. Out of a total of 1,681 projects, 814 were delayed, while 408 experienced cost overruns. The report reveals that the original cost of implementation of these projects amounted to Rs 24,16,872.28 crore, and their anticipated completion cost is likely to be Rs 28,96,947.15 crore.
The 408 infrastructure projects affected represents a cost overrun of approximately 19.86% of their original cost. As for the number of delayed projects, the 814 delays could be reduced to 607 if the delay were calculated based on the latest schedule of completion. The report further stated that for an additional 419 projects, neither the year of commissioning nor the tentative gestation period has been reported.
Regarding the delayed projects, the report indicated that 200 of them had overall delays ranging from 1-12 months, 183 had been delayed for 13-24 months, 300 projects for 25-60 months, and 131 projects for over 60 months. The average time overrun of these delayed projects is 37.04 months.
Several factors contribute to the time and cost overrun of these projects, which include delays in land acquisition, obtaining forest and environmental clearance, lack of infrastructure support, change in scope, and law and order issues. The report also attributed state-wide lockdowns across India due to COVID-19 as a reason for the delay in implementing these projects.
The report warned that many project executing agencies were not reporting revised cost estimates and commissioning schedules for several projects. Such underreporting implies that time or cost overrun figures could be well below actual figures.
The situation presents a significant challenge to India’s infrastructure development, as investors and developers have to grapple with the cost and time overrun of infrastructure projects. In response, authorities have to address the issues contributing to the delays and cost overrun. The report calls for more efficient and timely implementation of these projects to avoid further delays or cost overruns.
