Why do some government projects in India take far longer and cost far more than expected?

Government projects overrun so reliably that overruns have become the norm rather than the exception. The Ministry of Statistics and Programme Implementation’s flash report for March 2024 found that of 1,839 central projects worth Rs. 150 crore or more, 779 were running late, with cost overruns exceeding Rs. 5 lakh crore over their original budgets. The average delay was around 42 months, three and a half years past schedule.

Before diagnosing the cause, it is worth establishing that India is not uniquely bad at this. The Oxford economist Bent Flyvbjerg studied 258 major transport infrastructure projects across 20 countries and found that 86 per cent exceeded their original cost estimates. The pattern held everywhere: over budget, over time, consistent across project types, geographies, and historical periods stretching back nearly a century. Most striking of all, the accuracy of cost estimates has not improved over that century. Decades of advances in project management have left the underestimation exactly where it started. That points to something structural rather than accidental.

So why does this happen everywhere and repeatedly? There are two distinct problems at the source of this. The first is a bias in the cost estimates made at the approval stage, and it is as much a behavioural problem as a policy one. There is a powerful incentive to underprice a project when seeking approval, because a lower estimate is easier to justify and fund. By the time the true cost surfaces, construction is underway, and cancellation has become politically unthinkable. This is not always deliberate. Often, it is genuine optimism about timelines, geology, land acquisition, or coordination, the same optimism with which you buy the dumbbells and skipping rope, certain you will exercise after work each day, and then watch the equipment gather dust. The difference is that when the optimism is strategic, when a lower number wins the contract, the incentive to underestimate never goes away. 

The second problem appears during execution: accountability is weak. In a private firm, a manager who repeatedly misses deadlines faces consequences, such as lost contracts, demotion, or dismissal. In government, the consequences are far softer. Slipped timelines get revised rather than investigated. Budgets that balloon get topped up rather than scrutinised. Officials are rarely rewarded for delivering on time or penalised for failing to do so, so there is little to press anyone toward either.

The pattern shows up in specific projects. The Mumbai-Ahmedabad High Speed Rail, launched in 2017 with a 2023 target, saw land acquisition drag across three states well past its deadline. The Delhi-Meerut Regional Rapid Transit System spent years tangled in approvals and funding delays before construction could gain momentum. These are not outliers. They are representative of the hundreds of projects tracked in the government’s own monitoring data.

When delay carries no real consequence, delay stops being a failure and becomes the default. Fixing that means changing the incentives that surround a project, not simply adding another layer of management on top of it.