Infrastructure Projects Facing Major Time and Cost Overruns, Says Report

Cost and time overruns have reportedly become features of a majority of the sectors in infrastructure development with the four major ones facing an “acute” problem.

A report in Mint was compiled by analysing six years of data from quarterly reports of the Ministry of Statistics and Programme Implementation (MOSPI), the last of which was released in September 2019.

At a time when the government is looking to spend heavily on infrastructure in order to revive a stuttering economy. The four major sectors – railways, road transport and highways, power and petroleum – reportedly fared particularly badly.

The business daily reports that the first half of 2019 saw an increase in government spending on infrastructure with latest Union Budget setting aside about 15% of its spending, an approximate Rs 1.7 trillion, on infrastructure.

However, data reportedly showed that the projects are plagued with issues of completion and over-spending with the total government spending at Rs 10 trillion on 1,676 projects.

Projects are added and removed from the Mospi sets quarter by quarter and they provide an indication of projects completed (removed) and new ones (added). In 24 quarters between December 31, 2013 and September 30, 2019, seven quarters reportedly show a negative difference. What it means is that in these quarters, new projects could not come up to replace outgoing ones.

Mint says that in the period prior to demonetisation, the number of infra projects facing time overruns fell from 46% in the quarter ending March 2015, to 29% in December 2016. Projects facing cost overruns in the same period had declined from 20% to 11.5%. However, the trend was reversed in the last quarter (September 2019) for which the data is available, it mentions that time and cost overruns were back at 35% and 20% respectively.

Mospi categorises infrastructure projects above Rs 1000 crore as ‘mega projects’ and those above Rs 150 crore (and less than Rs 1000 crore) as ‘major projects’. Out of the 1676 projects mentioned earlier, 28% are reportedly in the first category, accounting for 78% of the total spending. The newspaper says that cost overruns are greater for mega projects, the figure standing at 26.5% against 4.5% for major projects.

Between 2013-14 and 2018-19, only 55% of the projects under road transport and highways were completed. According to data sourced by Mint, the magnitude of time and cost overruns in Railways projects stands at 112%, the figure for power is at 45% and road transport and highways is at 36%.