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New Delhi: Cost and time overruns have plagued infrastructure projects – costing Rs 150 crore or more – of the Union government in the last five years, data submitted by the Ministry of Statistics and Programme Implementation in Lok Sabha has revealed.
Between March 2018 and March 2022 the percentage of cost overrun increased from 13.44 percentage points to 22.01 percentage points. The number of projects that faced a time overrun also went up from 98 to 224.
BJP MP Dushyant Singh had placed a question before the lower House, in response to which Minister of State Rao Inderjit Singh placed state-wise details of projects facing time and cost overruns, the total original cost of implementation of these projects and the anticipated cost of completing these projects in the last five years.
A closer look at the data reveals that the situation was no better in states where the Bharatiya Janata Party has been in power for at least two terms now. In both Uttar Pradesh and Gujarat, which are projected as models of good governance by the party, there was an increase in the cost overrun of central projects in both actual and percentage terms. In the smaller BJP-ruled states of Assam and Haryana the number of central projects which experienced time overrun rose during this five-year-period.
The data also revealed that during this period, cost escalation ran into several lakhs of crores of rupees. As of March 2018, there were 1,315 projects (of Rs 150 crore and more) that were implemented in 33 states and Union Territories. Some were also multi-state in nature. The number of such projects increased to 1,579 by March 2022.
In March 2018, the original cost of the central projects was Rs 16,23,254.71 crore while the anticipated cost was 13.44% higher at Rs 18,41,400.35 crore – a project cost increase of over Rs 2.18 lakh crore.
By March 2022, the anticipated cost of central projects rose from an original of Rs 21,95,196.72 crore to Rs 26,78,365.62 crore – entailing an increase of 22.01% over the original cost, which means additional cost of nearly Rs 4.83 lakh crore.
Average time overrun 42.13 months
While acknowledging that “the average time overrun for the delayed projects as on 01.07.2022 is 42.13 months,” the Minister stated that “the reasons for cost overruns are project-specific, depend on a variety of technical, financial and administrative factors, and differ from project to project.”
He also submitted that as reported by the project implementing agencies, the main reasons for increase in cost of the projects were:
- under-estimation of original cost;
- changes in rates of foreign exchange and statutory duties;
- high cost of environmental safeguards and rehabilitation measures;
- spiralling land acquisition costs;
- shortage of skilled manpower/ labour;
- changes in project scope;
- monopolistic pricing by vendors of equipment services; and
- general price rise/inflation and time overruns.
The minister blamed “delay in land acquisition and forest clearance” for time overrun, leading to cost overrun, “as reported by implementing agencies.”
On the steps being taken to restrict the cost escalation and ensure timely completion of projects, the minister’s reply stated that the Union government was “undertaking periodic review of projects under PRAGATI, rigorous project appraisals, online Computerized Monitoring System (OCMS) for better monitoring, setting up Revised Cost Committees in the ministries, and undertaking regular review of infrastructure projects by the concerned administrative ministries.”
Also, the reply stated that the government was setting up Central Sector Projects Coordination Committees (CSPCCs) in the states under concerned chief secretaries for removal of bottlenecks and facilitating the speedy implementation of major projects.
UP, Gujarat suffered from rise in both time and cost overruns
A closer look at the data submitted by the ministry revealed that the progress of large-scale central projects has also been slow in BJP-ruled states, both big and small. Larger states like Uttar Pradesh and Gujarat have witnessed an increase in cost overruns in percentage terms to the original cost.
In Uttar Pradesh, as of March 2018, there were 89 projects being done at an original cost of Rs 1,11,376.79 crore – in which there was already a 1.62% cost overrun. By March 2022, there were 107 projects being done at an original cost of Rs 1,40,718.77 crore but which had experienced a cost overrun of 11.12%. During this period the number of projects in the state which experienced time overrun rose from 1 to 20.
In the case of Gujarat, as of March 2018 there were 48 projects being done at an original cost of Rs 44,056.76 crore. These had, in March 2018, experienced a cost overrun of 8.08%.
By March 2022, there were 57 central projects in the state being done at an original cost of Rs 1,07,818.58 crore. Cost overrun for these had increased to 13.26%.
The number of projects that experienced time overrun also rose from 1 to 13 during this period.
Assam and Haryana projects had lower cost overrun percentage but more time overruns
In smaller states like Assam and Haryana cost overruns came down on a percentage basis during this period. However, the number of projects which experienced time overruns rose.
In Assam, there were a total of 44 projects in March 2018, being done at an original cost of Rs 26,450.20 crore and which had experienced a cost overrun of 36.39%. By March 2022, there were 41 central projects in the state worth Rs 46,908.76 crore but the cost overrun in percentage had come down to 19.95%. However, the number of projects in the state which saw time overruns rose from 8 to 11 during this period.
Likewise, in Haryana, there were 22 projects in March 2018 at an original cost of Rs 14,152.14 crore which had a cost overrun of 13.33%. As of March 2022, there were 34 projects in the state with a total original cost of Rs 60,478.29 crore and with a cost overrun of 4.43%. Here, too, the number of projects which suffered time overrun went up from one to three.