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Centre projects costs rise to a 1 year high in April
ECONOMY & POLICY

Centre projects costs rise to a 1 year high in April

In April, cost overruns in central government projects surged to a 12-month peak, reaching 20.09%, as revealed by data released by the government on Tuesday. This marked an increase from 18.65% in the previous month. The total value of 1,838 projects, each valued at Rs 1.50 billion and above, amounted to Rs 33.2 trillion, exceeding the original cost by Rs 5.6 trillion.

Of these projects, 43% (792) were delayed compared to their original completion dates, while 514 experienced delays in both completion time and cost. In April, 61 projects were successfully completed, while 29 new projects were initiated, with completed projects costing Rs 466 billion and new projects estimated at Rs 1.3 trillion.

Despite the surge in cost overruns, the average time for project completion decreased to 35.4 months, down from 36.04 months in March. However, a concerning trend emerged, with 48% of projects experiencing delays of over two years. Notably, 54 projects, representing only 2.93% of the total, accounted for 43.39% of the total cost overrun and 21.34% of the total time overrun.

Among various sectors, railways encountered the highest cost overruns in April, standing at 126.5%, with more than half of its projects facing such issues. Meanwhile, road transport and highways, constituting nearly 60% of the projects, experienced a cost overrun ratio of 23.7%. Additionally, over one-third of railway projects and more than 10% of road projects reported time overruns, according to government data.

Despite these challenges, the government remains committed to infrastructure development, as recognised by international agencies as a key driver of economic growth. Projections suggest a growth rate of 7.8% for FY24, with an expected growth of 6.8% in the current fiscal year. (ET Infra)

In April, cost overruns in central government projects surged to a 12-month peak, reaching 20.09%, as revealed by data released by the government on Tuesday. This marked an increase from 18.65% in the previous month. The total value of 1,838 projects, each valued at Rs 1.50 billion and above, amounted to Rs 33.2 trillion, exceeding the original cost by Rs 5.6 trillion. Of these projects, 43% (792) were delayed compared to their original completion dates, while 514 experienced delays in both completion time and cost. In April, 61 projects were successfully completed, while 29 new projects were initiated, with completed projects costing Rs 466 billion and new projects estimated at Rs 1.3 trillion. Despite the surge in cost overruns, the average time for project completion decreased to 35.4 months, down from 36.04 months in March. However, a concerning trend emerged, with 48% of projects experiencing delays of over two years. Notably, 54 projects, representing only 2.93% of the total, accounted for 43.39% of the total cost overrun and 21.34% of the total time overrun. Among various sectors, railways encountered the highest cost overruns in April, standing at 126.5%, with more than half of its projects facing such issues. Meanwhile, road transport and highways, constituting nearly 60% of the projects, experienced a cost overrun ratio of 23.7%. Additionally, over one-third of railway projects and more than 10% of road projects reported time overruns, according to government data. Despite these challenges, the government remains committed to infrastructure development, as recognised by international agencies as a key driver of economic growth. Projections suggest a growth rate of 7.8% for FY24, with an expected growth of 6.8% in the current fiscal year. (ET Infra)

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