Smoothening Bharatmala’s bumps
The announcement of Rs7 trillion of investment for building 83,677km of highways is not a response to slowing growth. It has been cooking for a while, albeit with changing recipes. In April 2015, news reports on Bharatmala indicated that it involved building 5,300km of roads at a cost of about Rs14,000 crore, covering the west-to-east land border. Soon after, in July 2015, Parliament was informed that “about 7,000 m of new NHs (national highways) under Bharatmala Pariyojana” was under review, though the “project (was) yet to be formally launched”. By March 2016, the project was still “to be formally launched” but its scope had increased to “17,200km length of roads and about 205 ROBs (railway over-bridges)/RUBs (railway under-bridges)”.
The Public Investment Board finally cleared the Bharatmala Pariyojana Phase-I, with 24,800km and Rs3.85 trillion in June 2017, quite a leap from the initial news reports, and indicating substantial land acquisition. To this, the recent announcement added 10,000km of highways pending under the National Highways Development Project (NHDP), and almost 49,000km of other roads, each adding about Rs1.5 trillion. The documents with the announcement indicate that much effort was expended in preparing this Pariyojana. Four broad issues, however, need attention.
First, a major achievement of the previous National Democratic Alliance (NDA) regime and subsequent governments is the Pradhan Mantri Gram Sadak Yojana (PMGSY), with over 500,000km of rural roads, and a cumulative expenditure of over Rs1.5 trillion. This has contributed in large measure to making our growth inclusive. This network of rural roads needs institutions and budgets, in order to not slip into disrepair like many other rural infrastructure investments. Villages in Bharat need all-weather connectivity to truly benefit from the four-lane connectivity to 550 districts that Bharatmala promises.
Second, Bharatmala must be compatible with the challenge of climate change and our Paris commitments. Fortunately, it is not oblivious to this issue—substantial investments are planned for waterway terminals and multi-modal logistics parks under the ‘Logistic Efficiency Enhancement Programme’ as part of the component on National Corridor Efficiency Improvement. This can reduce logistics costs and substantially push Make in India, as well as make our freight mobility much greener. But, that said, do we really need a greenfield Vadodara-Mumbai Expressway together with an Ahmedabad-Mumbai high-speed rail? The risk is that the easy bits—highway building—will be implemented, but the harder greener inter-modal connectivity projects will languish, like the leftover bits of the original NHDP. This is especially so, since these projects do not have the institutional support that the National Highways Authority of India (NHAI) is able to provide to highway projects.
Third, Bharatmala is as much about urbanization as highways. It proposes to build logistics parks in 46 cities (there is some discrepancy about the number in the documents), and ring roads in 32 cities. Of these, 28 and 22 cities respectively are “Smart Cities”, but, tellingly, none of these cities included such projects as part of their proposals. There appears to have been little consultation with the urban agencies in these cities (sadly, municipal governments have little control on such critical decisions), but these interventions are likely to radically alter their urban form, driven by rapid changes in land values. This could affect the implementability of some of these ring roads and logistics parks. Also sadly, one suspects, the lack of attention to urban public transport will reinforce the shift to private road transport modes and negatively impact climate change.
Fourth, Bharatmala returns to the successful programmatic approach used for NHDP, with sanctions accorded by cabinet at a programme level, and specific projects cleared by an expanded NHAI board. Concomitantly, on financing, the Central Road Fund (CRF) allocations were modified in 2016 to provide larger allocations for border roads and expand the category of rail projects. A further amendment, introduced in the Lok Sabha in July this year, proposes to extend support to national waterways too, a category expanded with some foresight last year. The share of state roads has, however, been reduced.
Assured funding from CRF can expedite implementation—but highways aside, the lack of institutional support can slow down the non-NHAI components of Bharatmala. Even for NHAI, it is important that its projects avoid the engineering, procurement and construction (EPC) route and maximize the use of right-risked PPP (public-private partnership) models like hybrid annuity. In addition, more electronic tolling—moving away from cash to digital modes—can maximize leveraging of toll revenues. Institutional investors with low risk appetite, like pension and insurance funds, can then participate in the monetization of highways.
Maybe all this has been thought through. But, if not, there is still time to smoothen the bumps on Bharatmala.
Partha Mukhopadhyay is a senior fellow at the Centre for Policy Research, New Delhi.