Pandemic speed bump still haunts infra projects even as gears shift

• As many as 848 of India’s top 1,820 infrastructure projects or 46.6% are facing delays, says government data.
• On an average, the overall delay across these projects is 36.59 months, says IPDM data.
• Road and transport sector has the highest share of delayed projects, with railways coming in second.
  

As many as 848 of India’s top 1,820 infrastructure projects are facing delays, says data by Infrastructure and Project Monitoring Division (IPMD) under the Ministry of Statistics and Programme Implementation.

Even as 46.6% of infra projects are facing delays as of January 2024, there has been a significant improvement since the beginning of FY24. As of March 2023, the ratio of delayed projects to total projects was much higher at 56.7%.

While the data shows that more projects are progressing at a faster rate now than they did last year, there is much to catch up to. Before the pandemic, the ratio of delayed projects was at 32.6%.

“The above analysis shows that while time delays in infrastructure projects have declined relative to March 2023, it still remains high when compared with the pre-pandemic period. This suggests that some of the effects of the pandemic still linger on,” said Aditi Gupta, economist at Bank of Baroda (BoB).

On the bright side, 618 projects are on schedule and 56 projects are ahead of schedule, says BoB data. The IPMD monitors the progress of high value infrastructure projects that cost over ₹150 crore.

In the slow lane: Road sector has most delays

Road transport and highways sector has the highest share in the total number of delayed projects. Half of the delayed projects are in the transport sector, but it also has a high number of projects, at 1,021.

Railways comes a distant second with 12.4% share in delayed projects, but the extent of their delays range from 3 months going as high as 255 months. In the case of road projects, the range of delays is anywhere between 1 month and 131 months.

As many as 32% of projects are showing delays between 25-60 months. A total of 123 projects are experiencing a delay of more than 60 months. The overall delay in the 848 projects is 36.59 months on an average.

Source: Infrastructure and Project Monitoring Division, MOSPI, Bank of Baroda Research

A significant number of projects are also showing cost overruns. The cost of the 1,820 projects under monitoring stands at ₹30.7 lakh crore. That’s 18.7% above the original cost which was ₹25.9 lakh crore.

“Interestingly, there has been a significant reduction in cost overruns of infrastructure projects since March 2023, when the cost overrun stood at 22%. Even when compared with the pre-pandemic period (19.4% in January 2020), the cost overrun is lower,” said Bank of Baroda.

The period just after the pandemic saw the highest cost overrun. The phase of reopening along with the Russia-Ukraine war led to a sharp increase in input prices in this period. “With a correction in the global commodity prices, the cost overrun is also trending lower,” said Gupta.

The Indian government has increased its capital expenditure outlay by 11.1% in the 2024 Interim Budget. A year before, it had increased its capex expenditure outlay by 37.4 % in 2023-24 to ₹10 lakh crore.