Delay in central projects cost over Rs 1 lakh cr with Railways on top: ASSOCHAM

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Delays in execution of Central sector projects have resulted in cost over-runs exceeding a whopping Rs 1 lakh crore with the Railways being on top of the list making it imperative for the new government to kick-start them and revive the investment cycle in the public projects which will then leave a positive cascading for the overall industrial climate, an ASSOCHAM paper said.

According to the report, till March, 2013 the cost over-runs had been worked out at Rs 94,800 crore in about 285 Central projects. Assuming about 8-10 per cent annual accretion, the over-runs would easily exceed Rs one lakh crore by March, 2014.

"We would urge Prime Minister Narendra Modi to personally take note of such projects while the PMO should regularly monitor these projects. As there is a demand slowdown in the economy, revival in the investment cycle should be led by the Central sector projects. Ironically, most of the projects stuck in the government sector do not face the problem of demand slowdown. In sectors like Railways, power and coal there is no shortage of demand. The problem is totally of supply matching the demand even in an environment of slowdown," said ASSOCHAM President Rana Kapoor.

The cost over-runs due to delays in execution of Central projects are maximum in the Railways among the infrastructure projects running into Rs 45,600 crore.

At the end of March, 2013 as many 41 Railways projects with original cost estimates of Rs 27,900 crore saw an escalation of near about three times to Rs 73, 500 crore, adds the ASSOCHAM findings.

"The new Railway Minister must look at these projects and put them back on track. A clear-cut roadmap for their revival and execution should be unveiled in the Budget," Rana Kapoor said, raising concern over such delays.

However, he expressed confidence that the Modi Government riding on popularity wave will show pace as the country needs a lot of catching up.

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Story first published: Wednesday, May 28, 2014, 23:00 [IST]
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