Economic survey 2011-12: Rs 1.08 trillion cost overrun in 583 central projects

CHENNAI: Of the 583 central projects underway involving an outlay of Rs.8.21 trillion only seven are ahead of schedule and 166 are on schedule, says the Economic Survey. The original cost of the projects when sanctioned was Rs.7.12 trillion but delays pushed up costs by 15.3 per cent or Rs.1.08 trillion.

Curiously, 175 projects have been sanctioned without specifying any commissioning schedule while 235 projects are running behind schedule.

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According to the survey, tabled in parliament by Finance Minister Pranab Mukherjee Thursday, Rs.3.44 trillion has been spent on these projects, which is 41.9 per cent of the revised cost.

"Maximum number of projects delayed relate to road transport and highways (90), followed by power (45), petroleum (29), railways (26), and coal (17)," the survey notes.

In the railways sector, of 132 projects costing more than Rs.1.5 billion, in 101 the anticipated cost is 181 per cent higher than the original estimated cost.

Likewise, cost overruns of 17 projects in the petroleum sector are expected to be 32 per cent. Twelve projects in coal and 13 in road transport are expected to have cost overruns of 29 per cent and 61 per cent respectively.

The delay in railways ranges from 2 to 213 months and in road transport and highways from 4 to 106 months.

According to the survey, analysis based on the flash reports for the month of October 2011 on these projects by the Ministry of Statistics and Programme Implementation (MOSPI), shows sub-optimal project implementation across all the major sectors.

The ministry monitors the progress of all central sector projects involving an outlay of Rs.1.5 billion and above.

"While some of the project delays are due to exogenous factors beyond the control of the implementing agencies, in the majority of cases the delays are mainly due to a dismal record of project implementation starting from project identification and designing to undue delays in procurement (both tendering and contracting) and ineffective project monitoring," says the survey.