.

Why railway
project costs
go off track OUT OF LINE NORTHERN RAILWAY FACED
Different standards and guidelines HIGHEST COST OVERRUNS
IN 69 PROJECTS, EXPENDITURE (Ratio of anticipated to original cost)
for calculating budgets lead to widely INCURRED WAS HIGEHR THAN THE COST Central Railway 1.5
varying estimates of cost overruns Original cost Expenditure Dedicated Freight Corridor 3.6
 Central Railway 2,271.5 2,922
across various lines  Dedicated Freight Corridor 11,589 35,951
Corporation Of India Ltd
East Central Railways 3
Corporation Of India Ltd
ISHAAN GERA this record by a substantial mar- East Coast Railways 1.4
 East Central Railway 2,787 7,660.6
New Delhi, 10 May gin. In this zone, the original cost Eastern Railways 1.6
of eight projects worth ~4,979
 East Coast Railway 1,922.8 2,190.7

L
Indian Railway Construction 1.5
ast month, Business Stan- crore had increased to ~43,872
 Eastern Railway 1,335.9 2,101.2
 North Eastern Frontier Railway 10,217.7 23,458.7 Company Ltd
dard reported that the crore — a jump of nearly nine
Indian Railways was times, making it the worst per-  North Eastern Railway 1,590.4 2,132 Northern Central Railway 1.3
North Eastern Frontier Railway 2.8
expecting another cost revision forming zone.  North Western Railway 410.1 775.6
from the Cabinet. In this latest The cost performance of the  Northern Railway 2,027.1 3,654.5 North Eastern Railway 1.5
round, the eastern and western Western Central Railway zone  Rail Vikas Nigam Ltd 19,084.2 30,672 North Western Railway 1.5
freight corridors saw a 54 per was comparable to the dedicated  South Central Railway 3,472.5 3,877 Northern Railway 8.8
cent cost escalation. freight corridor, with anticipated  South East Central Railway 585.9 1,162.1 Rail Vikas Nigam Ltd 1.6
This marks a steady accel- costs 3.2 times higher than the  South Eastern Railway 969.8 1,155 South Central Railway 1.5
eration of railway project costs original. In the case of the  South Western Railway 2,595.4 2,927.1 South East Central Railway 1.5
for this signature project. In Eastern Central zone, the differ-  Southern Railway 2,026.1 4,303.7
2015, the Cabinet approved a ence was three times.  Western Central Railway 672.3 4,348.4
South Eastern Railway 1.5
revised cost estimate of ~81,459 Projects under Rail Vikas  Western Railway 2,187.6 3,805.6 South Western Railway 1.4
crore for the eastern and west- Nigam Limited, a state-owned Sothern Railway 2.9
 Overall 65,745.2 133,758.8
ern sections of the dedicated company that builds infrastruc- Higher value signifies higher cost overruns; figures in ~cr Source: MOSPI Western Central Railway 3.2
freight corridor. The report ture required by the Railways,
Western Railway 1.7
highlighted that the figure had accounted for 14 per cent of the
risen to ~1.24 trillion, of which total projects facing cost over-
PROJECTS HAVE BEEN DELAYED FOR LONG Overall 2.2
(List of top 15 projects; cost figures in ~cr)
~21,846 crore was for land acqui- runs; the Eastern Central
sition and ~1.02 trillion for con- Railway zone accounted for 9.3 Date of Original/ Anticipated Cumulative Anticipated
struction and other costs. per cent. The North Eastern approval revised cost cost expenditure cost completion
But such steep revisions in Frontier Railway, which South Central Railway Dec-01 1,045.2 2,120.16 1,068.77 Mar-27
costs come as no surprise. A accounts for another 9 per cent Rail Vikas Nigam Ltd Mar-21 1,503.71 3,633.12 3,925.76 Jun-22
Business Standard analysis of delayed projects, had a cost South Central Railway Apr-16 3,631 3,887.48 1,495.93 Mar-25
found that cost escalation or overrun of 2.8 times. Rail Vikas Nigam Ltd Apr-15 3,246.26 3,548.68 3,683.68 Dec-23
overruns are common in all Not just anticipated costs, East Coast Railway Apr-15 2,499.71 2,499.71 835.3 Mar-26
railway zones. further analysis found that for
Dedicated Freight Corridor Aug-16 234.5 235 14.14
In some cases, the difference 69 projects of the 162 that were
between original costs and antic- facing cost overruns, expendi- Corporation Of India
ipated costs of projects was high- ture had also exceeded actual
Northeast Frontier Railway Sep-06 385.2 1,145.79 937.36 Mar-24
Northeast Frontier Railway Apr-15 2,232.32 2950 1,986.82 Mar-23
er than those for the dedicated costs. Rail Vikas Nigam account-
Northeast Frontier Railway Apr-15 870.96 1,873.21 1,646.66 Mar-22
freight corridors. ed for a quarter of such projects.
Overall, analysis of data from The expenditure in such cas- East Central Railway Apr-97 324.73 1090 1,093.59 Jun-23
the Ministry of Statistics and es was double the original cost East Central Railway Apr-97 162.87 614.45 353.25 Mar-25
Programme Implementation’s envisaged by the Railways. East Central Railway Apr-03 528.65 2,066.78 1,610.87 Dec-24
Infrastructure and Project Moni- While the original cost of Rail- Northeast Frontier Railway Sep-06 532.87 2,145 1,108.94 Mar-24
toring Division show that for 162 ways projects was ~72,247 crore, East Central Railway Apr-08 326.2 2,995.01 2.55 Mar-24
projects of the Railways that the Railways had until February East Central Railway Apr-99 325 735.2 392.88 Dec-24
were facing cost overruns, the 2022 spent ~1.42 trillion on these
anticipated costs were 2.2 times projects. Western Central Rail- al expenditure outstripped costs pendent. Sometimes the and railway commentator, told
the original cost. For the dedica- way zone was the worst perform- by 3.1 times. Railways changes the formula Business Standard.
ted freight corridor, the ratio of ing, facing actual expenditure What accounts for these for cost, and there are some A better option would be
anticipated cost to original cost that was 6.5 times higher than chronic cost overruns? “Each costs that are not included at to implement a standard
was 3.6 times. But the Northern the original cost. For the eastern railway zone has its own cost the time of commissioning,” guideline for all railway zones
Railway zone “outperformed” dedicated freight corridors, actu- analysis cell, and they are inde- R N Misra, a former professor to follow.