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Delay in Central projects cost over Rs 1 lakh crore; Railway runs late costing it Rs 45,000 crore: Assocham
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, a paper by industry body Assocham has pointed out.

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.  While the original costs were worked out at Rs 4.75 lakh crore for these projects; they  had overshot to Rs 5.69 lakh crore in 2013. 

“We would urge Prime Minister Mr. 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's President Rana Kapoor in a statement.

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's 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. 

Likewise, in a very crucial area of power , the cost over-runs have run in excess of Rs 15,000 crore as the costs of projects had gone up from the original estimates of Rs 1.35 lakh crore to Rs 1.50 lakh crore. “The multiplier effect of the power sector on the entire economic activity would be much more as several parts of the country are terribly power deficit and reeling under outages”.  The new minister in charge should take up these projects on top priority basis. 

In a similar fashion, the damage done in the petroleum sector due to project delays exceeds Rs 10,000 crore and Rs 620 crore in steel.

“The critical point is that these are key infrastructure projects which can show the way to others. Importantly, they do not involve much of states’ involvement. The problems would largely relate to inter-ministerial issues which must be resolved at the earliest….If the PMO keeps a regular track of them, they can be put on stream within the current FY 2014-15 and contribute to the overall industrial growth,” the Assocham President said.

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