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J&K, Maharashtra, Project Delay Culprits; Delhi, Goa Score

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Jammu & Kashmir, Maharashtra lead the list of states where some 190 out of 555 Central projects with investment outlays of over Rs 150 crore have reported cost overruns of Rs 1,30,089 crore or 60.3%

 

The sectors which are the main culprits for these overruns are Railways, Power, Petroleum and Roads Transport and Highways.

 

Data provided by the Ministry of Statistics and Programme Implementation (MoSPI) and collated by IndiaSpend’s Danielle Collaco also show that states like Delhi, Goa and Nagaland have managed to stay within their budgets; at least where projects funded by the Centre go.

 

Specific details of the projects concerned were not available in this document, sourced via a Rajya Sabha question in May 2012. IndiaSpend has profiled some of them in an earlier report.

 

Jammu and Kashmir leads with the highest overruns. Of a total of 10 projects, 6 have overshot budgets, leading to cost overruns of Rs 19,612 crore. The average cost overrun per project: Rs 3,269 crore; the highest in the country.

 

Maharashtra is another stunner. Out of a total of 51 projects, 18 are staring at an overrun, causing losses of Rs 16,301 crore. The average cost overrun per project is about Rs 906 crore.

 

The table below shows the 10 states with the highest overruns in the country.

 

10 States With Highest Project Overruns

 

State Total No of Projects Projects with cost overrun
Total no of projects Original Cost (in Rs cr) Anticipated Cost (in Rs cr) Cost Overrun (in Rs cr) Cost Overrun (%) Average Cost Overrun Per Project [Cost overrun/no of projects]
J&K 10 6 7,866.5 27,478.4 19,611.9 249.3 3,268.65
Maharashtra 51 18 29,305.0 45,606.1 16,301.1 55.6 905.66
Assam 37 13 11,923.7 23,630.9 11,707.2 98.2 900.55
West Bengal 25 12 20,281.1 29,664.3 9,383.2 46.3 781.93
Karnataka 25 10 8,795.3 17,646.7 8,851.4 100.6 885.14
Tamil Nadu 35 13 27,364.2 35,649.3 8,285.1 30.3 637.31
Andhra Pradesh 33 13 11,677.0 19,002.1 7,325.1 62.7 563.47
Bihar 26 15 16,731.8 21,982.3 5,250.5 31.4 350.03
Arunachal Pradesh 4 2 6,441.3 11,082.7 4,641.4 72.1 2,320.7
Uttar Pradesh 24 9 3,729.2 7,783.0 4,053.8 108.7 450.42

Source: Rajya Sabha Question 2633

 

Assam has a total of 37 projects, 13 of them have exceeded their budgets, causing a cost overrun of about Rs 11,707 crore. The average cost overrun for each project is about Rs 900.5 crore.

 

West Bengal has 12 projects that have faced cost overruns amounting to Rs 9,383 crore. The average cost overrun per project is about Rs 782 crore.

 

Another interesting state to note is Arunachal Pradesh. It had 4 projects, of which 2 have overshot their budgets, resulting in overruns of Rs 4,641 crore. This means the average cost overrun for each project is about Rs 2,321 crore!

 

Small States Rack Up Huge Bills

 

While we may have looked at losses incurred on projects of the larger states, the smaller states can’t be ignored. The table below shows the status of the central sector projects in a few of the smaller states.

 

Project Overruns Of Small States

 

State Total No of Projects Projects with cost overrun
Total no of project Original Cost (in Rs cr) Anticipated Cost (in Rs cr) Cost Overrun (in Rs cr) Cost Overrun (%) Cost Overrun Per Project [Cost overrun/no of projects]
Manipur 1 1 727.6 3,056.9 2,329.3 320.2 2,329.3
Sikkim 2 1 1,339.5 3,380.6 2,041.1 152.4 2,041.1
Mizoram 2 1 619.3 2,393.5 1,774.2 286.5 1,774.2
Tripura 3 2 1,234.4 1,765.2 530.8 43.0 265.4

Source: Rajya Sabha Question 2633

 

Manipur has incurred cost overruns on the only project that it had under its control, amounting to losses of about Rs 2,329 crore, a cost overrun of about 320%!

 

Sikkim has also managed to spend about Rs 2,041 crore more than what was originally budgeted for its project.

 

Mizoram has incurred cost overruns on one of the 2 projects under its control. It has spent about Rs 1,774 crore more than what it was originally supposed to spend. This is a cost overrun of about 286.5%.

 

Out of a total of 3 projects, Tripura has incurred a cost overrun of Rs 530.8 crore on 2 of its projects, a cost overrun of about 43%. The average cost overrun per project is Rs 265 crore.

 

All Is Not Lost

 

However if we were to look at the figures of all the 555 projects, the cost overrun amounts to 16.9% or Rs 1,20,711.9 crore, indicating that some of the projects are progressing within the stipulated budgets.

 

 Projects With Cost Overrun

 

No Of Projects Total Cost (cr) Projects with cost overrun
Original Anticipated Cost Cost Overrun (%) No of Projects Original Cost Anticipated Cost % Increase Base
555 713,744.5 834,456.4 16.9 190 215,579.1 345,668.1 60.3

Source: Rajya Sabha Question 2633

 

Good Performers

 

Here’s a look at some of the states that have actually stayed within their budgets and have no cost overruns.


States With No Cost Overruns

 

States Total No Of Projects Original Cost (in Rs cr) Anticipated Cost (in Rs cr) Cost Overrun (in Rs cr) Cost Overrun (%)
Delhi 3 37,985.0 37,965.4 -19.6 -0.1
Goa 1 335.6 335.6 0 0.0
Nagaland 1 850.0 850.0 0 0.0

Source: Rajya Sabha Question 2633

 

Delhi has been efficient in its expenditure while implementing projects. It actually spent less than the original amount allotted for its projects, leaving a surplus of Rs 19.6 crore. Goa and Nagaland have performed well, sticking to their budgets and not spending extra funds.

 

Reasons For Cost Overrun

 

The MoSPI says these are the reasons for the cost overruns:

 

  • Changes in rates of foreign exchange and statutory duties
  • High cost of environmental safeguards
  • Higher cost of land acquisition and rehabilitation measures
  • Change in the scope of project
  • Under-estimation of original cost, since the projects are tendered and the tenders may go above the estimate
  • Cost of input materials rise therefore increasing the expenditure on the project
  • Time overrun

 

And there are some which cause large skews. Like the Udhampur-Srinagar-Baramulla rail project in J&K. The project is now on a 17-year time overrun, reportedly due to geological factors, land acquisition and forest clearances.

 

233 Projects Delayed

 

Speaking of time overruns, about 233 projects out of the 555 central projects have overshot their dates of completion, causing losses amounting to about Rs 76,679 crore!

 

The table below shows the sector-wise breakup of the delayed projects and damages inflicted on the Centre’s coffers.

 

Sectors Which Have Most Overruns

 

Sector No of Projects No of Delayed Projects Original Cost Of delayed Projects Anticipated Cost of delayed projects COR (Rs cr)
Atomic Energy 5 3 28,983 33,821 4,838
Civil Aviation 5 4 4,395.6 4,985.1 589.50
Coal 51 17 11,824.7 14,994.8 3170.10
Fertilisers 6 2 763 763 0
Steel 16 5 46,957.9 52,521.9 5,564
Petrochemicals 1 0 0.0 0.0
Petroleum 69 31 84,314.1 92,699.5 8385.4
Power 96 47 124,405.2 1,39,091.3 14,686.10
Railways 131 27 22,136.8 52,427.2 30,290.40
Road Transport & highways 127 78 27,654.3 29,936.9 2,282.60
Shipping & ports 25 10 8,208.4 9,033.6 825.20
Telecommunications 18 7 3,457.6 3,647.0 189.40
Urban Development 4 1 6,395 11,609 5,214
Water Resources 1 1 542.9 1,187 644.10
Total 555 233 3,70,038.5 4,46,717.1 76,678.60

Source: Rajya Sabha Questions 3255

 

Bad Performers

 

The figures in the table tell an interesting story. While Road Transport and Highways has the highest number of delayed projects, coming in at 78, its cost overruns isn’t one of the highest, coming in at Rs 2,282.60 crore.

 

Railways is another story altogether; it has about 27 delayed projects out of a total of 131, but it’s cost cverruns are the highest among all the sectors coming in at Rs 30,290 crore; almost 40% of the entire amount of Cost Overruns!

 

Power has 47 delayed projects of a total of 96 projects. Its cost overruns come in at Rs 14,686 crore, the second highest in this category.

 

Petroleum, much talked about now, has about 31 delayed projects of a total of 69 projects. Its cost overruns amount to Rs 8,385 crore

 

Better Performing Sectors

 

However, there are some sectors that don’t seem to be that troublesome, at least with respect to completing their projects on time and keeping their cost overruns low. Petrochemicals for one, has no delayed projects and no cost overruns.

 

Water Resources and Urban Development both have a delayed project each. However, while Water Resources has a cost overrun of Rs 644 crore, Urban Development has a cost overrun of Rs 5,214 crore. Fertiliser is doing fine too – 2 delayed projects of a total of 6.

 

IndiaSpend earlier compiled a similar list (The Rs 100,000 crore Bill No One’s Talking About) of sectors which had the highest overruns, both in terms of cost and time.

 

Water resources, urban development, railways and steel were the biggest offenders.  The private sector has been complaining vociferously about the logjam in permission and approvals, which results in delayed projects. But it’s evident that the brunt of delays is not borne by the private sector alone.

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