Economy

Large Central infra projects face cost overruns of ₹4.11 lakh crore

Our Bureau New Delhi | Updated on September 16, 2020 Published on September 16, 2020

Rao Inderjit Singh   -  THE HINDU

Large infrastructure projects funded by the Centre are facing cost overruns of more than ₹4.11 lakh crore, according to the Minister of State (Independent Charge) of the Ministry of Statistics and Programme Implementation, Rao Inderjit Singh.

Responding to a query in the Lok Sabha, Singh said, “As on July 1, 2020, there are 1,683 on-going Central sector infrastructure projects costing ₹150 crore and above with an anticipated completion cost of ₹24,77,167.67 crore and original cost of ₹20,65,335.20 crore with total cost overrun of ₹4,11,832.47 crore in figures and 19.94 in percentage.”

He said that the number of infrastructure projects above ₹150 crore undertaken by the Centre during each of the last three years and the current year have risen from 1,315 in March 2018 to 1,405 in March 2019, 1,686 in March 2020 and down to 1,683 in June 2020.

Commenting on the reasons for cost overruns, Singh said that they are project-specific and depend on a variety of technical, financial and administrative factors.

Highlighting the main reasons for increase in cost of the projects, Singh said that these are underestimation of original cost; changes in rates of foreign exchange and statutory duties; high cost of environmental safeguards; and rehabilitation measures. In addition, spiralling land acquisition costs; shortage of skilled manpower/ labour; changes in project scope; monopolistic pricing by vendors of equipment services; general price rise/inflation and time overruns have also been mentioned.

A delay in land acquisition and forest clearance has been one of the reasons for time overrun, leading to cost overrun as reported by implementing agencies, Singh added.

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Published on September 16, 2020
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