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As many as 647 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns totalling more than Rs 4.65 lakh crore, according to a report. The Ministry of Statistics and Programme Implementation monitors infrastructure projects worth Rs 150 crore and above. Of the 1,526 such projects, 647 are delayed, 393 reported cost overruns and 219 projects reported both time and cost overrun.

“Total original cost of implementation of the 1,526 projects was Rs 21,26,460.93 crore and their anticipated completion cost is likely to be Rs 25,91,823.45 crore, which reflects overall cost overruns of Rs 4,65,362.52 crore (21.88 per cent of original cost),” the ministry’s latest report for August 2022 said.

According to the report, the expenditure incurred on these projects till August 2022 is Rs 13,60,645.94 crore, which is 52.49 per cent of the anticipated cost of the projects. However, the report said the number of delayed projects decreases to 500 if the delay is calculated based on the latest schedule of completion.

Further, for 607 projects, neither the year of commissioning nor the tentative gestation period has been reported.

Out of the 647 delayed projects, 132 have overall delays in the range of 1-12 months, 118 have been delayed for 13-24 months, 273 for 25-60 months and 124 projects have delays of 61 months and above. The average time overrun in these 647 delayed projects is 41.64 months.

Reasons for time overruns as reported by various project-implementing agencies include delay in land acquisition, delay in obtaining forest and environment clearances and lack of infrastructure support and linkages. Delay in tie-up for project financing, delay in finalisation of detailed engineering, change in scope, delay in tendering, ordering and equipment supply and law and order problems are among the other reasons. The report also cited state-wise lockdowns due to COVID-19 as a reason for the delay in the implementation of these projects.

It has also been observed that project agencies are not reporting revised cost estimates and commissioning schedules for many projects, which suggests that time/cost overrun figures are underreported, it added.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members