Delays in execution of central sector projects have resulted in cost overruns exceeding a whopping Rs 1 lakh crore with the Railways being on top of the list, making it imperative for the new government to kick-start them and revive the investment cycle in public projects which will have a positive cascading effect on the overall industrial climate, Assocham said.
Till March 2013, the cost overruns had been worked out at Rs 94,800 crore in about 285 central projects. Assuming about 8-10 per cent annual accretion, the overruns would easily exceed Rs 1 lakh crore by March 2014. While the original costs were worked out at Rs 4.75 lakh crore for these projects; they had overshot to Rs 5.69 lakh crore in 2013.
The cost overruns due to delays in execution of central projects are maximum in the Railways among the infrastructure projects running up to Rs 45,600 crore. At the end of March 2013 as many 41 railways projects with original cost estimates of Rs 27,900 crore saw an escalation of near about three times to Rs 73, 500 crore.
“The new Railway Minister must look at these projects and put them back on track. A clear-cut roadmap for their revival and execution should be unveiled in the budget,” Assocham President Rana Kapoor said, raising concern over such delays. However, he expressed confidence that the Modi government would show pace as the country needed a lot of catching up.
Likewise, in a very crucial area of power, the cost overruns have run in excess of Rs 15,000 crore as the costs of projects had gone up from the original estimates of Rs 1.35 lakh crore to Rs 1.50 lakh crore.