As per the prevailing norms in the road sector, the escalating land acquisition cost is not just consuming 70% of the total road project cost, but also causing undue delays in the execution of the projects. To address this, the transport ministry is contemplating building elevated road corridors across the country, said Indian Army General (Retd) V K Singh, Minister of State for Road Transport & Highways. He was addressing the Infra Conclave 2019 Challenges and Way Forward organized by the PHD Chamber of Commerce in New Delhi.
Though the overall cost of constructing elevated corridors is higher than building surface or plain roads, they require less land and ensure quicker execution. The increased cost can be recovered by monetizing surplus land parcels along the highways by engaging private player for providing roadside amenities.
In addition, NHAI has targeted ₹one lakh crore in revenue from toll and wayside amenities over the next five years to fund the new projects. As of now, NHAI has readied road projects worth ₹8 lakh crore to be awarded in the next couple of years. The finance ministry is setting up a high-level task force to identify road projects worth ₹100-lakh-crore to be executed by 2024-25. The Minister revealed that his ministry has a basket of projects worth ₹15 lakh crore and is now weighing various financing options and is keen on monetizing various aspects of road assets.
Amid talks of a slowing economy, the highways sector has the potential to revive growth by building road infrastructure, which will spur growth in steel, cement and automotive industries, including the labor market. Good road connectivity is key to driving economic and social development as roads enable seamless movement of men, machines and material across the length and breadth of the country.
While the overall allocation for NHAI has seen a rise in the past couple of years, its IEBR (Internal and Extra Budgetary Resources) have increased from ₹50,532.41 crore in FY18 to ₹62,000 crore in FY19, and to ₹75,000 crore in FY20. Roads with tolling system will increase to 75,000 km over the next five years. Currently, around 24,996 km of roads are under the tolling system, and over 2,000 km will be added by the end of the current financial year. The toll income by the end of this (financial) year will reach ₹30,000 crore and with NHAI building more roads and other amenities, the income from toll and other sources will reach the targeted figure, and NHAI will be able to get loans from banks and raise money from the market. Currently, the ministry is roping in the insurance sector for bank guarantees to ensure smooth flow of finances for the new projects.
Ashish Wig, Chairman, Infra Development Committee, urged the transport ministry to streamline the DPR preparing process as in most cases the project reports are ill-conceived and not based on ground realities, which is causing undue delays in project execution and one of the main reasons for cost escalations. He recalled that the current government, shortly after taking over the reins at the Centre in May 2014, had pushed the pace of road construction and made it a benchmark for India’s infrastructure creation. It also initiated a new integrated infrastructure program for building roads and highways, railways, airports, and projects like Sagarmala and Bharatmala.
India has been grappling with high logistics costs of 14% and development of roads, railways and waterways will cut down logistics costs to 8%. With several large conglomerates and infrastructure companies weighed down by debt, the onus of creating infrastructure is on the Centre. On its part, the NDA government did not lack ambition as was evident when the road construction target of 45-km per day was set in the last financial year; from 27 km achieved per day in 2017-18, it touched nearly 33 km per day. While the total investment for the Bharatmala project was pegged at ₹10 trillion—the largest ever outlay for a government in road construction scheme—the country has envisaged ₹8 trillion of investment until 2035 under the Sagarmala program.
CERA’s Secretary General, Satin Sachdeva, highlighted the problems confronting the construction equipment rental industry including undue delay in payments by the road building agencies. He also urged the GST Council and the Government to reduce GST rates on equipment rental services. The Minister promised to address the issues.
President, PHD Chambster, D K Aggarwal, Member Finance, Inland Waterways Authority, Alok Ranjan, Member Projects, NHAI, R K Pandey, General Manager, Contract NCC Ltd, Dr. Sridhar Mothe, Vice President Sustainable Investment Banking, Yes Bank, Daanish Verma, President, ACE, Pradeep Sharma, Head EHS RBF India, L&T, Mohammad Moizuddin and Chief Scientist, CRRI, K Sitaram Anjanyelu, also addressed the gathering.