Private investments in the highways sector have remained stagnant in recent years despite the many policy initiatives by the government to incentivise equity investments and lending to the sector by banks. (Representative image: PTI)
Recognising the role highway construction can play in quick job creation, the Narendra Modi government has scaled up its plan for the sector — a massive Rs 6.92 lakh crore will be mobilised and spent over “the next five years” to add 83,677 km to the country’s 1.1 lakh km highway network. This entails the pace of constructing these roads to rise to 46 km per day from 22.5 km in 2016-17 and 20 km in the first half of this fiscal. According to a plan approved by the Cabinet on Tuesday, the 34,800-km Bharatmala project that would lay out virtually as a garland on the country, will see funding to the tune of Rs 5.35 lakh crore. As far as the resources are concerned, Rs 2.09 lakh crore would come from market borrowings, Rs 1.06 lakh crore as private investments and the balance from the Central Road Fund (CRF), toll receipts and also proceeds from monetisation of the state-funded highways by leasing them out to private parties under the toll-operate-transfer model.
Private investments in the highways sector have remained stagnant in recent years despite the many policy initiatives by the government to incentivise equity investments and lending to the sector by banks. Currently, the focus is largely on government-funded projects and the hybrid annuity model that has greatly mitigated the investors’ risk. The balance work of 48,887 km under schemes other than Bharatmala would be undertaken by the National Highways Authority of India and the ministry of road transport and highways in parallel, an official statement said, adding that Rs 97,000 crore of the proposed Rs 1.57 lakh crore investment to be required to complete these projects would come from the CRF and balance as budgetary support.
Finance secretary Ashok Lavasa said under the Bharatmala project, the government intends to build 9,000 km of highways as economic corridors, 6,000 km as inter-corridor/feeder routes, 5,000 km as national corridors, 2,000 km each as border roads and coastal/port connectivity roads and 800 km as greenfield expressways. The 10,000 km works still pending under the National Highways Development Programme will also be taken up under Bharatmala, he said. The boost to border roads will help multiply India’s trade with Bangladesh, Nepal and Bhutan, besides giving a fillip to the economies of the northeastern states, Lavasa added.
Of the nearly $12 billion trade between India and the three neighbouring countries, 65% is via roads. Under the TOT scheme, the government plans to monetise 82 operating highways on long-term basis, hoping to garner Rs 34,000 crore. The first tranche of such state-funded projects have already been recently bid out for Rs 6,258 crore. Recently, road transport and highways minister Nitin Gadkari said the government would launch the Bharatmala project to build over 20,000 km of highways in the first phase. The Cabinet also approved building 1.09 lakh km of rural roads under the Pradhan Mantri Gram Sadak Yojana over the next three years. This will entail investments of Rs 88,185 crore. Besides, 5,411 km of roads worth Rs 11,725 crore (including upgrading and rural roads) in 44 left-wing-extremism-infested districts by 2019-20. Under PMGSY, 47,447 km was completed in 2016-17 and 36,449 crore in the year before.
