Roll-out delays cause Rs 4.5 lakh crore cost overrun for manufacturing projects
According to a recently-released Assocham study, the roll-out of key manufacturing projects is hit by estimated cost overrun of a staggering Rs 4.5 lakh crore, as of FY 2013-14, because of delays in land acquisition, funding constraints, and lack of prompt clearances.
The study also observed that, along with the mentioned reasons for the delays in the roll-out of crucial manufacturing projects, the implementation of the projects is also delayed due to investors, for reasons like inappropriate planning, change of ownership, involvement of other stake holders, and lack of co-ordination with contractors.
The study has revealed that, during FY 2013-14, the manufacturing sector across India attracted total live investments worth more than Rs 30 lakh crore. Out of these investments, nearly 44.5 percent projects – worth Rs 13 lakh crore – have failed to kick off.
Against the backdrop of the study’s observation, Assocham Secretary General D S Rawat said it is imperative that the Government ensures “time-bound execution of projects” and also limits the time-frame for clearances by concerned authorities. Moreover, penalties should also be put in place of deadlines are not met.
With the study highlighting the fact that “the overruns vary from one month to as high as 50 months, placing the project viability at risk,” Rawat said: “New investments in the manufacturing sector have declined at an annual negative average rate of 21.5 per cent since 2009-10.”
Source – The Economic Times
