Sources say the construction pace will speed up in the remaining months of the financial year, sustaining the uptrend seen since the Modi government assumed office.
The construction rate, however, is still far below the target, set by road transport and highways minister Nitin Gadkari for the current fiscal, of building these roads at a pace of 45 km per day.
All agencies responsible for highway construction built 5,759 km of highways in the first eight months of the current financial year, compared with 4,942 km in the corresponding period last year, sources in the ministry of road transport and highways said.
While the National Highways Authority of India (NHAI) has achieved the pace of 8 km a day from 6.7 km a day in the corresponding period last year, the ministry’s performance has improved marginally to 15 km a day against the corresponding period’s achievement of 13 km a day.
The ministry is largely implementing projects via the engineering, procurement and construction (EPC) route where the government bears all project costs. NHAI projects are increasingly being built through the hybrid annuity model (HAM), an improved public-private-partnership (PPP) model in which the government bears 40% of project costs.
Though the pure-play PPP ventures which had come to a grinding halt by the end of the UPA rule haven’t picked up even during the NDA rule, the construction pace has gradually improved over the last four-and-half-years, thanks to a higher level of efficiency achieved in government-funded projects and the formulation of concessions-driven (HAM ventures that saw some private investments.
Under Gadkari’s watch, the construction pace has picked up from 11.6 km a day during FY14, the last year of UPA-2, to 27 km a day in FY18.
The fast-tracking of projects is despite the fact that large private investors, whose projects floundered due to lower-than-expected toll receipts, deserting the sector after turning defaulters to lenders. Banks have been reluctant to resume lending to the sector for a considerable part of the current rule.
According to analysts, though things have improved a lot in recent years, problems of land acquisition and utility shifting, non-availability of aggregates, poor performance of contractors and delays in clearances continue to slow construction.
On the award front, however, things are yet to pick up. During the first eight months of the current financial year, a total of 2,105 km of projects were awarded, compared with 2,927 km in the corresponding period last year. The target for the current fiscal, however, is a huge 20,000 km.