An analysis of central sector infrastructure projects worth ₹150 crore and above reveals escalating cost overruns in the Northeastern states. Government data indicates that cost overruns in the region have been consistently higher than the all-India average, with a significant spike in recent months.
For the month of August, the Northeastern states’ average cost overrun stood at 48.6 percent, more than double the 22.4 percent cost overruns recorded for all of India. While the 54 ongoing projects in the Northeast were originally valued at ₹1.88 lakh crore, their revised costs now touch ₹2.8 lakh crore in August. A similar trend was witnessed in July as well. While this disparity is particularly stark when compared to the beginning of the year, it is to be noted that the Ministry of Statistics and Programme Implementation’s (MOSPI) recent July and August reports highlight a specific focus on projects in the Northeast.
Cost overruns for infrastructure projects were at 17.1 percent for the Northeast states versus 9.5 percent for all of India in January, according to MOSPI’s earlier reports.
There are also significant cost variations within the Northeastern states. Arunachal Pradesh and Assam are the biggest contributors to the regional average in August, with cost overruns of 60.5 percent and 52.5 percent respectively. Other states like Sikkim and Manipur also show substantial overruns at 31.6 percent and 31.1 percent, while Mizoram, Meghalaya, Tripura and Nagaland have relatively lower overruns.
A sector-wise breakdown reveals that the Petroleum and Natural Gas ministry bears the brunt of these overruns, with a staggering 61.4 percent increase in costs. The Power and Railways ministries are also significantly impacted, with overruns of 45.5 percent and 36.7 percent respectively. In contrast, sectors like civil aviation have experienced no cost overruns, while higher education has seen a rare negative costs of -3.3 percent, indicating projects completed under budget.
Despite these significant overruns, the Northeastern states account for a small fraction of India’s total infrastructure projects. In August, their share of central sector projects was only 6.8 percent, a slight increase from 6.4 percent in July.
The unique geographic challenges of the Northeast suggest a combination of factors responsible for such cost escalations. These could include delays in land acquisition and environmental clearances, logistical challenges and the region’s difficult terrain. These issues often lead to project delays, which, in turn, result in higher costs due to inflation, material price fluctuations and increased labour expenses.
With Prime Minister Narendra Modi having laid the foundation for ₹9,000 crore worth of development projects across three Northeastern states just last week, the issue of cost overruns is now increasingly significant.
First Published: Sep 18, 2025, 16:23
Subscribe Now