Highway construction bulldozes Covid-19 roadblocks, clocks record level in FY21

Bucking the trend in other infrastructure sectors which suffered on account of the pandemic, 2020-21 turned out to be a stellar year for the highway sector. A record 13,298 km of highways were constructed in the financial year, as against around 10,240 km in FY20, which made for ~30% y-o-y growth and a pace of 36.4 km/day.

On the award front, 10,467 km of projects were awarded, up ~17% over 8,948 km in the preceding year. A host of industry-friendly measures taken by the government are said to be behind this performance, with analysts holding that continuation of measures to boost liquidity and relaxation in norms for bidders could see construction pace crossing the 40 km/day mark in the new fiscal.

The performance of the Nitin Gadkari-led highway ministry is specially commendable given that no construction activity was allowed in the first 20 days of April 2020, owing to the Covid-induced lockdown. To boost cash flows for contractors in the pandemic-hit months, the ministry reduced the quantum of the performance guarantee and released the excess money.

It also released all pending payments and nudged companies to achieve mandated milestones and receive payments speedily. These measures boosted the confidence of sector players, leading to brisk activity, said Jagannarayan Padmanabhan, director, CRISIL Infrastructure Advisory.