Good news for Modi govt: Cost overruns of projects down by 23%

Thanks to the Narendra Modi government’s focus on infrastructure development and a fall in commodity prices, cost overrun in central sector projects under implementation has come down by 23% as on March 1, 2016, from the level five years ago.

New Delhi

Updated: May 4, 2016 08:06 IST

The Centre as well as the PSUs’ accelerated spending on capital assets saw central sector projects rise from 554 in 2012 to 1,071 in 2016, according to government data. (Reuters)

Thanks to the Narendra Modi government’s focus on infrastructure development and a fall in
commodity prices, cost overrun in central sector projects under implementation has come down by 23% as on March 1, 2016, from the level five years ago.

Also, the number of projects under implementation has almost doubled.

The Centre as well as the PSUs’ accelerated spending on capital assets saw central sector projects rise from 554 in 2012 to 1,071 in 2016, according to government data.

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Of the 1,071 projects, 238 projects had a cost overrun of Rs 1.35 lakh crore, averaging Rs 569 crore for a project. Comparatively, the cost overrun in 166 projects was Rs 1.23 lakh crore in 2012, averaging Rs 743 crore for each one.

However, average time overrun of infrastructure projects rose to 3.5 years for 341 projects as on March 1, 2016, up from 3 years for 260 ventures on April 1, 2012, reflecting a slowdown in the economy.

The causes for time and cost overruns are project-specific, depend on a variety of technical, financial and administrative reasons, and differ from project to project. The projects were spread across many sectors, including railways, highways, steel, shipping, power, petroleum and coal.

The ministry of statistics and programme implementation monitors ongoing central sector infrastructure projects costing Rs 150 crore and above (Rs 20 crore and above before April 1, 2010) on time and cost overruns through its online computerised monitoring system.

As on April 1, 2007, 149 (out of 491 projects of over Rs 20 crore under implementation) ventures were having cost overruns averaging Rs 261 crore, while 157 were facing average time overruns of 2 years.

The major steps undertaken by the Centre to complete projects in a timely manner include rigorous project appraisal, regular review of infrastructure projects by the administrative ministries and setting up of central sector projects coordination committees in the states under the chief secretaries for removal of bottlenecks and facilitating the speedy implementation of projects.

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