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Cost Overruns Plague 448 Infrastructure Projects

In the third quarter of the fiscal year 2023-24, a report from the Ministry of Statistics and Programme Implementation highlights significant cost overruns in infrastructure projects. Out of 1,897 projects assessed in the Quarterly Project Implementation Status Report (QPISR), 448 projects faced cost overruns amounting to a staggering Rs 5,55,352.41 crore, representing 65.2% of their sanctioned cost.

Moreover, the report reveals that 292 projects experienced cost overruns totaling Rs 2,89,699.46 crore against the latest approved cost. Additionally, 276 projects grappled with both time and cost overruns. Alarmingly, 307 projects either failed to report their original or anticipated completion dates or had already surpassed them.

The anticipated completion cost for all 1,897 projects stands at Rs 31,74,489.91 crore, with only 53.22% of this expenditure realized by December 31, 2023, amounting to Rs 16,89,400.92 crore. This figure represents 63.9% of the original cost.

Looking at the reasons behind these overruns, project implementing agencies cited issues such as delays in land acquisition, challenges in obtaining forest and environment clearances, and disruptions due to law-and-order problems. Furthermore, state-wise lockdowns imposed in 2020 and 2021 due to the COVID-19 pandemic also contributed to project delays.

While some cost overruns were attributed to general price escalation, the report underscores the potential for minimizing cost escalation caused by delays through enhanced project management and oversight. The report also notes that a total allocation of Rs 3,70,983.54 crore has been set aside for these projects in the fiscal year 2023-24.