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Business News/ Economy / Road work slows down; only 45% of target met

Road work slows down; only 45% of target met

This is despite government pumping in record ₹2.16 trillion to make 13,800 km of highways this fiscal.

The poor run of construction this year has been aggravated by even worse performance in terms of awarding road projects. Premium
The poor run of construction this year has been aggravated by even worse performance in terms of awarding road projects.

Highway construction has continued to show sluggish growth despite the Centre earmarking record 2.16 trillion capex in the first nine months of the current fiscal.

According to the ministry of road transport and highways (MoRTH) data, India has added 6,216 km of national highways in April-December 2023, just 45% of the 13,800 km construction target, ahead of the general elections.

The slow pace has come despite the ministry increasing its capital expenditure to 2,15,910 crore, or 83.49% of the record high capex outlay of 2,58,606 crore for FY24, with maximum spending going towards National Highway Authority of India (NHAI), the prime road building agency in the country.

“Highway construction may not have picked up pace this year, but it is still higher than last year when about 5,744 km of work was completed till December-end. As over 10,000 km of highways were built last year, the hope is that just over that number may be constructed this year, too, but the aspirational target of 13,800 km may not be achieved," said a person aware of the development.

If 10,000 km of highways are constructed this year, it will be closer to the past two years . Against a target of 12,500 km, 10,457 km or roads were built in FY22 and 10,331 km in FY23.

The poor run of construction this year has been aggravated by worse performance in terms of awarding road projects. Till December, MoRTH has award 3,111 km of highways compared to 7,123 km in period in FY23. Though the ministry is hopeful that awards may still end up over 10,000 km this year, experts feel this will not be easy.

“It appears that the government has been more cautious in awarding projects where the land acquisition and associated permits are not in place. Also, delay in awards under Bharatmala Phase I has also led to a bottleneck leading to a shortfall in roads awarded," Ashish Suman, Partner, JSA Advocates and Solicitors said.

The government has maintained focus on infrastructure development in the country, which saw MoRTH getting record high budgetary capex allocation this year. The government is also fully funding NHAI’s capex through its own budget so that the high debt level of the road developer does not hamper work.

MoRTH expects the pace to pick up under the new government that would start to implement Vision 2047 programme, where 50,000 km of access-controlled highways are proposed over the next two decades. Also, the ministry proposes to use the election code of conduct period to complete detailed project reports of projects so that pipeline of projects could be expanded and awards could be completed quickly.

According to a report from rating agency ICRA, highway awards slow down in the last quarter of a financial year falling just before elections, when the model code of conduct comes into force. If this scenario plays out in FY24, constructing over 80 km of highways per day in the last three months would be difficult, making the target of 13,800 km for FY24 unachievable.

Highway construction in the pre-pandemic period of FY20 spanned 10,237 km at a daily rate of 28.04 km. The pace increased in the first pandemic year (FY21), when lockdowns helped accelerate construction, resulting in a record 13,327 km of highways built at 36.51 km per day. In FY22, the rate slowed to 10,457 km at 28.64 km per day. For FY22, the road ministry initially aimed to construct 14,600 km of highways, or 40 km per day. However, it later revised the goal to 12,000 km. The year FY23 ended with 28.3 km/day construction with overall 10,331 km being built in the year.

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Subhash Narayan
Subhash is the infrastructure editor at Mint and tracks the momentous developments taking place in the space that is fast changing the Indian landscape. He feels that reporting has been a passion that provides the necessary adrenaline rush and keeps you going.
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Published: 09 Feb 2024, 05:55 PM IST
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