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Cost overrun of infra projects at 42% in AP

Cost of infrastructure projects in Andhra Pradesh shot over to Rs2.01 lakh cr from Rs1.42 lakh cr in 2023

Cost overrun of infra projects at 42% in AP

New Delhi: Among States, Andhra Pradesh has suffered the most in terms of cost escalation of infrastructure projects. The original cost of projects in the State was Rs1,42,280.96 crore, but at the end of 2023, it was anticipated at Rs2,01,850.75 crore, official sources told Bizz Buzz. The increase, Rs59,569.79 crore, was almost 42 per cent of the original cost.

By the end of December 2023, there were 1,820 projects worth Rs150 crore and more with the original cost of Rs2,587,066.08 crore and the anticipated completion cost of Rs3,069,595.88 crore across the country. That is, cost overruns are estimated to cost Rs482,529.8 crore or 18.65 per cent more than what was envisaged in the beginning.

It was only the projects, which fall in multiple states that the cost overrun, of Rs65,921.89 crore, was more than that of Andhra Pradesh. The original cost in multi-state projects was Rs302,248.46 crore, which was anticipated at Rs368,170.35 crore on January 1, a rise of 21.81 per cent.

In terms of percentage, Mizoram suffered the most, with the anticipated cost, Rs19,928.05 crore, 75.55 per cent more than the original of Rs11,351.53 crore.

Uttarakhand also suffered badly, with the anticipated cost, Rs55,102.82 crore, almost 49 per cent more than the original cost of Rs36,997.91 crore.

Of the 1,820 projects, 56 were ahead of schedule, 618 were on schedule, and 848 delayed. As many as 431 projects had cost overruns; 298 projects were reported with inadequate information about the commissioning schedule.

The reasons cited by the government for cost overruns are various. These include underestimation of the original cost, changes in rates of foreign exchange and statutory duties, the high cost of environmental safeguards and rehabilitation measures, spiraling land acquisition costs, changes in the scope of projects, monopolistic pricing by vendors of equipment services, general inflation, disturbed conditions, and time overruns.

Ravi Shanker Kapoor
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