Delayed investment projects in Chhattisgarh result in cost overrun: Assocham

Delay in land acquisition, lack of nods, fund constraints, poor supply, law & order problems are among key factors that have resulted in serious cost overruns

The poor execution of investment projects worth Rs 2.39 lakh crore in Chhattisgarh has pushed up its cost by nearly Rs 1 lakh crore, which is over 41 per cent of the actual cost, according to a study report released by the ASSOCHAM.

In all, 151 Projects with investments worth almost Rs three lakh crore have remained non-starter, which is about 55 per cent of the total outstanding investments worth Rs 5.6 lakh crore attracted by Chhattisgarh from various domestic and foreign sources both in public and private sectors as of financial year 2014-15," the report 'Impact of delay in investment implementation in Chhattisgarh,' released here by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), said.

Out of these 151 projects that remained stuck under different stages of implementation across Chhattisgarh as of FY 2014-15, 73 projects reported either time or cost overruns or both.

The National Secretary General of ASSOCHAM, D S Rawat said that amid stuck projects in Chhattisgarh as of FY 2014-15, electricity sector had maximum share of 52 per cent followed by manufacturing (38 per cent), mining (six per cent), non-financial services (3.5 per cent), construction and real estate (0.2 per cent) and irrigation (0.2 per cent).

"Delay in land acquisition, lack of clearances (both environment and non-environment), fund constraints, poor promoter interest, unfavourable market conditions, dearth of skilled labour, poor supply of fuel/feedstock/raw material, law and order problems are certain key factors that have resulted in serious cost overruns," he added.

Sector-wise, cost of projects in services sector have surged maximum by 55 per cent followed by manufacturing (54 per cent), mining (53 per cent), electricity generation (33 per cent) and irrigation (three per cent). Ownership-wise, private sector owned investment projects constituted 67 per cent of projects that have registered cost escalation followed by Central government owned investment projects (32 per cent) and state government owned projects (one per cent).

Besides, central government projects have reported highest cost overrun to the tune of 47 per cent followed by private sector (37 per cent) and state government (10.5 per cent), the report said.