In a disconcerting turn of events, the cost overruns for central infrastructure projects in India have surged to a six-month high as per the latest government data release.
The estimated cost of these pivotal projects was a staggering 21.92% higher in September compared to their original budget, marking a substantial uptick from the 19.08% reported in August. Consequently, the government is now obligated to allocate an additional INR 4.5 lakh crore ($61.6 billion) to finance these endeavors, pushing the total spending figure to INR 24.8 lakh crore.
Moreover, the timeline for project completion has also seen an increase, with the projected time extending to 38.63 months in September, compared to the earlier forecast of 36.96 months in August.
Although there has been a marginal decrease in the number of delayed projects, with 823 in September compared to 830 in August, it’s concerning that 58% of these are now delayed for over two years.
The government’s monitoring portal reviewed a total of 1,418 projects in September, with 12 additional projects added from the previous month. The government successfully completed 46 projects within the month.
It’s worth noting that out of the projects reviewed, 268 were progressing according to schedule, while 242 were grappling with cost and time overruns. However, there is a caveat that these statistics may not reflect the actual situation on the ground, as not all agencies may be providing comprehensive reports or lists of milestones.
The report recommends that the responsible administrative ministries conduct thorough reviews of the projects to mitigate further cost overruns, delays, and to solidify milestones where they are currently absent. Additionally, they should revise cost estimates and commissioning schedules if necessary.
Railways emerged as one of the ministries grappling with the most substantial cost overruns, with anticipated costs running 68.1% higher than their initial estimates for 173 projects. Meanwhile, the water resources ministry faced severe cost overruns of 195.6% across 41 projects, and the road sector, responsible for almost half of the monitored projects, reported a 4.3% cost overrun.
In terms of regions, the northeastern states incurred the highest cost overruns, followed by Andhra Pradesh.