Highway construction target raised manifold; to construct 40 km roads per day

Announcing the ambitious goal, minister for road transport and highways Nitin Gadkari said on Thursday that that the process related to land acquisition and environmental clearances were being expedited.

Despite the pandemic and the elusive private investor, the government has set a ambitious target to build roads worth Rs 15 lakh crore over the next one-two years. This is a stiff rise from Rs 1-1.3 lakh crore per year spent on constructing highways in recent years; while the amount hovered around Rs 1 lakh crore between FY18 and FY20, analysts estimate that around Rs 1.4 lakh crore was spent in the last financial year, given the 30% jump on year in the highway length added in the year.

Announcing the ambitious goal, minister for road transport and highways Nitin Gadkari said on Thursday that that the process related to land acquisition and environmental clearances were being expedited.

Gadkari, who had set a 40 km/per day highway construction target for the current fiscal, up from 36 km/day achieved in the last fiscal, had on March 18 this year informed Parliament that “expenditures incurred (by the government) on the development works on the national highways” were Rs 1,00,178 crore in 2017-18, Rs 1,27,993 crore in 2018-19 and Rs 1,03,258 crore in 2019-20.

While the highway sector has been a silver lining when other sectors of the economy are languishing, analysts discounted the possibility of road construction worth Rs 15 lakh crore in a couple of years, even if the construction of roads other than highways, including village roads under the PM Gram Sadak Yojana (annual spend of roughly Rs 15,000 crore) is included. Obviously, the government is expecting larger private sector participation through the HAM and BOT routes, while also trying to augment government expenditure by pooling in resources including the proceeds of toll-operate-transfer projects.

The National Infrastructure Pipeline had pegged spend on roads at Rs 20.34 lakh crore between 2020 and 2025.

As on March 31, 2021, works on 2,108 highway projects with a cumulative length of 64,010 km, costing Rs 9,22,404 crore, were ongoing, according to the ministry of road transport and highways.

Providing the highest-ever Rs 1.18-lakh-crore capital outlay for the ministry for 2021-22, finance minister Nirmala Sitharaman said in the latest Budget that more than 13,000 km length of roads, at a cost of Rs 3.3 lakh crore, has already been awarded under the Rs 5.35-lakh-crore Bharatmala Pariyojana. Of this, 3,800 km of the roads have been constructed.

By March 2022, another 8,500 km projects would be awarded and an additional 11,000 km of national highway corridor would be completed, she said.

The increasing pace of highway construction, analysts believe, is the result of a slew of measures the government initiated in recent times like shifting from milestone-based billing (typically ranging between 45-75 days) to monthly billing and release of retention money, performance security in proportion to the work already executed which have helped in reducing cash conversion cycle favouring the contractors.