Infrastructure cost overruns hit a 12-month high

Cost overruns and delays continued to afflict central government projects in April with experts citing the general election as a key reason for the current slowdown in infrastructure activity.

The ratio of cost overruns in central government projects hit a 12-month high of 20.09% in April, rising from 18.65% in the previous month, government data showed on Tuesday.

During the month, the anticipated cost of 1,838 projects involving investment of at least ₹150 crore swelled to ₹33.2 lakh crore or ₹5.6 lakh crore more than the original cost. The ratio of delayed projects also rose compared with the previous few months.

Experts say elections tend to cause disruptions to overall project activity.

“Elections are one major factor for the rise in cost overruns in April, along with the rise in delayed projects,” said Paras Jasrai, senior analyst, India Ratings and Research. “Highway projects allocated slowed substantially in FY24.” A significant 43% or 792 projects missed their original completion date while 514 projects also went over budget, the data showed.A total of 61 projects were completed in April, while 29 projects got onboarded. The cost of completed projects was ₹46,649.7 crore, whereas the newly added projects cost ₹1.3 lakh crore.However, the average time for project completion dipped to 35.4 months compared with 36.04 in March.

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