Cost overrun of over Rs 2 lakh crore due to delayed projects needs urgent fixing
As per the latest updates from the ministry of statistics and programme implementation (MOS&PI) that monitors infrastructure projects worth Rs 150 crore and above, as many as 359 projects (each worth Rs 150 crore or more) have shown a cost overrun to the tune of Rs 2.05 lakh crore owing to various reasons, including procedural delays.
The total original cost of implementation of the 1,289 projects was over Rs 16 lakh crore but they are expected to cost over Rs 18 lakh crore, which reflects cost overruns of more than Rs 2 lakh crore (12.8 per cent of the original cost); the ministry's latest report for November 2017 has stated.
Of these 1,289 projects in question, 359 (27.85 per cent) have reported cost overruns, and 297-time escalation.
According to the report, expenditure incurred on these projects till November 2017 is over Rs 6 lakh crore, which is 35.67 per cent of the expected cost of the projects
Four of the total of 1,289 projects, have reported completion with 10 new projects having been initiated under MOS&PI in March itself. The silver lining is that a total of 327 projects are running on schedule; with 15 in fact ahead of the deadline, 297 delayed and 359 showing cost overruns. A total of 104 projects are showing both time and cost overrun with respect to the original implementation schedules, as per the report.
With reference to the latest revised schedules of completion, however, it is said that the number of delayed projects has shrunk to 258.
For 665 projects, where original/anticipated commissioning date has not been reported, all concerned have been requested by the ministry to provide the original/anticipated commissioning date so that these projects can also be monitored for completion vis-a-vis the targeted dates.
It noted that out of the 297 delayed projects, 51 projects have an overall delay in the range of 1 to 12 months, 65 projects (13 to 24 months), 103 projects (25 to 60 months) and 78 projects (61 months and above).
The report attributes the time overrun to a host of issues, including delay in land acquisition, forest clearance, supply of equipment, funds constraints, Maoist incursions, legal troubles and law and order problems.
The September 2017 flash had put the total number of projects worth Rs 150 crores and above at 1263 at the total original cost of Rs 15,84,393.23 crore. Total anticipated cost then stood at Rs 16,80,041.49 crore with a reported percentage cost over-run with respect to latest sanctioned estimates at 4.62 percent. Till the September flash, a total of 13 projects had been completed during the year 2017-2018 financial year at a cost of Rs 17,247 crore.
In order to ensure that the problem of cost escalation due to delay in completion is addressed, the Union government should encourage a healthy competition between its ministries and departments handling the projects.
Projects that are identified as delayed or headed for cost escalation should be reprioritised and pushed for early completion while at the same time ensuring that the quality is not compromised.
Losses incurred by the economy merely because of project delays are unfortunate and requires a systematic and focused approach to fix it.