The total original cost of 727 infrastructure projects, each with an outlay of Rs. 150 crore or more, covered under the 342nd Flash Report of the Ministry of Statistics and Programme Implementation, was about Rs. 9,45,397 crore as on May 1, 2014. The anticipated completion cost of these projects was likely to be Rs. 11,34,330 crore, which reflects an overall cost overrun of Rs. 1,88,933 crore (20 per cent of original cost). The entailed investment in these projects is around a tenth of the country’s total GDP at current prices.

Time overrun and cost overrun are major problems with public sector projects. In this context, indicating a casual approach in sanctioning projects and the resultant confusion on status of project implementation schedule, there were as many as 317 projects, out of 727 projects on MoSPI monitor, for which there was no information on commissioning schedules/dates. These projects involved a total outlay of around Rs. 2,00,722 crore, accounting for 21 per cent of total cost of all MoSPI projects. Railways have got 237 such projects (out of 283 railway projects) and road transport and highways 28 (out of 136 roadway projects).

Out of the remaining 410 projects, five projects were ahead of schedule, 123 were on schedule and 282 were delayed with respect to original schedule. The original cost of these 128 projects facing no time overrun was Rs. 2,48,694 crore. Out of the 282 delayed projects (outlay: Rs. 4,95,981 crore), 65 projects had overall delay of 1-12 months, 71 projects 13 to 24 months delay, 80 a delay in the range of 25 to 60 months, and 66 a delay of 61 months and above.

As a result of these delays ranging from one month to 240 months in individual projects, the total original cost of these 282 delayed projects was to escalate Rs. 1,09,610 crore (22 per cent), as per indications available in April. Delays were more in road transport and highways where 82 out of 136 projects; power where 54 out of 100 projects, petroleum where 53 out of 84 projects and railways where 36 out of 46 projects were running behind schedule (leaving out 237 projects where these details could not be ascertained).

Notably, Freight Operations Information System of Railways approved in March 1984 would likely be commissioned in March 2015, a delay of 240 months!

With respect to cost escalation, there were 235 projects whose original cost of Rs. 2,52,306 crore would shoot up 78 per cent to Rs. 4,48,411 crore. Of these, there were 89 projects afflicted with time as also cost overrun whose outlay would increase Rs. 1,13,259 crore (65 per cent); whereas 146 projects involving only cost overrun but no time overrun would see outlay shoot up by Rs. 82,846 crore (105 per cent). The cost escalation in these projects indicate shortcoming in drawing up feasibility reports including under-provision of material requirements, change in scope of projects and cost escalation in material/service inputs. A little cost saving was also expected in some projects in mining, petroleum sectors etc.

The capital outlay on the Udhampur-Srinagar-Baramulla project of Northern Railway would see a sevenfold rise to Rs. 20,000 crore. Part of the cost escalation has resulted from time overrun of around 181 months, with likely commissioning date now fixed in December 2017, against November 2002 scheduled earlier.

At aggregate level, project delays involving cost rise, a great evil that needs urgent remedial action, accounted for three-fifths of cost escalation, whereas projects involving cost hike (but no delays) due to various reasons that also need to be tackled, accounted for the balance two-fifths. Even the projects which are delayed but would not cost more according to current indications need attention to see that the delays are cut down so that the nation gets the output from these projects expeditiously.

Another major problem associated with public sector projects is lack of clarity on laying down major milestones in the project journey. There were as many as 511 central sector projects which have failed to provide information on this vital dimension; their total outlay of Rs. 4,55,651 crore, formed around half of the total outlay of all central sector infrastructure projects. In this, 281 were railway projects and 124 road transport and highway projects.

By the way, even while acknowledging pitfalls of public sector projects, there were over 200 government projects accounting for around a third of total original cost of all MoSPI projects, which would probably not see any cost or time overrun, according to indications available in April last.

The cumulative expenditure incurred on these projects till April was Rs. 5,64,251 crore, roughly half of the anticipated cost of the projects. The other half of the outlay (Rs. 5,70,080 crore), which is more relevant for material/service providers to project developers would be spent in the coming years.

Sector Numberof
Cumulative Expenditure Balance Expenditure
Atomic Energy 4 40,442 46,726 29,610 17,116
Civil Aviation 8 6,035 6,946 5,776 1,170
Coal 56 38,737 48,560 17,921 30,639
Steel 20 65,959 72,189 59,696 12,492
Petrochemicals 1 5,461 8,920 7,688 1,232
Petroleum 84 1,95,842 2,08,399 1,07,099 1,01,300
Power 100 2,46,281 2,67,160 1,43,452 1,23,707
Railways 283 1,49,809 2,67,704 81,685 1,86,019
Road Transport&
136 1,01,598 1,03,690 89,840 13,850
Shipping & Ports 19 15,617 18,601 8,396 10,205
Telecom 10 5,079 4,983 1,769 3,214
Urban Development 5 73,993 79,266 11,283 67,983
Water Resources 1 543 1,187 35 1,152
Grand Total  727 9,45,397 1,134,330 564,251 570,079

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