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Analysis of pace of growth in India's road and highways sector

IBEF, Knowledge Centre

Dec 06, 2017 18:14

India has a well-built roads and highways sector. As a factual figure, with roughly 5 million kilometers of a road-web spread out throughout the country, India has the second largest road network in the world. Besides, the robustness of the network can be gauged from the statistic that these roads bear more than 60 percent of total goods traffic in the nation. Strengthening the roads and highways infrastructure has been key priority of the Indian Government. The sector thus has been receiving strong budgetary support over the years.

The new Highway Development Plan

On October 24th this year, the Indian Government has approved the biggest ever Highway Development Plan for 83,677 kilometers of roads. This will involve an investment outlay of US$ 107 billion by 2022. According to sources, around 80 percent of this funding shall come from the Government’s side. The Government funds will be coming from Gross Budgetary Support (GBS) including the National Highways’ share of the Central Road Fund (CRF) cess, toll remittance, expected monetisation of NHs through the Toll-Operate-Transfer (TOT) route, market borrowings by the National Highways Authority of India (NHAI). The estimated share of private sector investment and expected monetization through the TOT route during this period is about US$ 16 billion and about US$ 5 billion respectively.

The 24,800 km Bharatmala Highway Programme, a sizeable program, is a part of this Plan. The NHAI has already formulated the Detailed Project Reports (DPRs) for 10,000 km of the identified network. This shall help a quicker roll out. NHAI and State Public Works Departments will be working hand-in-hand for speedy implementation. The NHAI is also taking revolutionary steps like facilitating online sale of FASTags and offline sale through Common Services Centre (CSC) near toll plazas.The National Highway Development Plan aims to pace up the process of land acquisition along with other requisite approvals to meet its targets on time.

A closer look at the Bharatmala Highway Programme

The Bharatmala Highway Programme is an umbrella highway development project. It envisions boosting the efficiency of the National Corridor (Golden-Quadrilateral and NS-EW corridor) by decongesting its choke points by lane expansion, building new ring roads, bypasses, elevated corridors and logistics parks.

Phase-1 of this project has already been sanctioned. This entails laying out 24,800 kilometers of roads at an investment of over US$ 83 billion by 2022. This program includes constructing 6,000 km long inter corridor and feeder routes, 2,000 km of border and international connectivity roads, 5,000 km to be upgraded under the national corridor efficiency programme, 800 km of greenfield expressways, 9,000 km under the national highway development programme and 2,000 km of coastal and port connectivity roads.

Bharatmala Phase-I Components

Component Length
(Kilometer)
Expenditure
(INR bn)
Economic corridors development 9000 1200
Inter-corridor & feeder roads 6000 800
National Corridors Efficiency improvements: 5000 1000
Border & International connectivity roads 2000 250
Coastal & port connectivity roads 2000 200
Expressways 800 400
Total 24800 3850

Source: Ministry of Road Transport & Highways, India

According to Mr Nitin Gadkari, the Minister of Road Transport & Highways, Shipping, Water Resources, River Development and Ganga Rejuvenation, the programme has been designed to bridge the gaps in the existing highways infrastructure so as to make the movement of man and material more efficient.

Bharatmala will grant India 50 national corridors as opposed to the six right now. With this, upto 80 per cent of freight shall travel along the Indian National Highways as against the 40 percent at present. The project shall connect 550 districts in the country through the National Highway linkages against the existing number of 300.

Rural Road Development Plan

Apart from the Highway Development Plan and the Bharatmala Programme, Indian Government also plans to spend around US$ 154 billion under Centre’s flagship Pradhan Mantri Gram Sadak Yojana (PMGSY). Specifically, these funds will be spent on building new roads, including in areas affected by the Left-wing extremism (LWE), and upgrading the existing ones. Besides this, the funds would be spent on linking all the 65,000 habitations that were not connected in the first 15 years of the programme, and also on upgrading the already built roads.

The Government of India plans to construct around 59,000 km of roads in rural areas in by March 2018 at the rate of almost 150 kilometers a day, even though it has set a target of building 57,000 kilometers officially. In 2016-17, the government was able to construct 47,500 kilometers of roads. “The pace of work seen in the last few years has instilled confidence that we would manage to even exceed our target in 2017-18,” revealed a Ministry official.

Impact

All these plans are promising for the future of Indian roads sectors as well as the country’s overall economic growth. For instance, let us have a closer look at the impact of the Highway Development Plan which shall be felt with a higher speed of traffic flow on key corridors. This will take place since the Plan shall be providing for uniform four-laned roads between the identified points. Each of these corridors is planned to be short and access-controlled for rapid freight movement. This is excellent news for Indian industry for free and fast flow of their road consignments. It is also encouraging for foreign companies planning to enter India.

The Plan eventually envisages reduction in logistic cost for the industry by building new roads and facilitating mobility on existing ones. The ultimate aim is to make an Indian truck to travel 700-800 kilometers daily, as compared to existing level of 250-300 kilometers at present. The Government is also rolling out smart-tag based tolling, towards achieving the goal.

These Plans collectively have got immense employment generation potential as well. Estimates suggest that roughly 500 million man-days will be generated collectively through them. This would be averaging to nearly 125 million man-days yearly from 2018-2022. “Of this, about 10 million will be professional man-days, 35 million skilled labour man-days and 80 million semi-skilled and un-skilled man days," as per a statement by the Ministry of Road Transport & Highways. Seasonal employment opportunities would also spring up as execution of highways projects would need professionals with skilled and semi-skilled qualifications.

The associated industries like iron & steel, construction equipment, construction chemicals, asphalt, bricks as well as cement will also get a boost.

Future

The Ministry of Road Transport and Highways keeps coming out with newer ways to speed up growth of the sector. For instance, it has recently decided to implement a “Value Engineering Program” to promote the use of new technologies, materials, and equipment in highways projects executed either under PPP mode or public funding mode.

The main objective of the programme is to use innovative technology, materials and equipment to reduce the cost of projects and make them more environment friendly, while simultaneously ensuring that the roads or bridges and other assets get constructed much faster, are structurally stronger and more durable.

The Value Engineering Programme is expected to increase speed of construction, reduce construction cost, increase asset durability and improve aesthetics and safety.

In conclusion, with a host of proactive actions already underway and many being planned, the future is bright for the growth of roads and highways sector in India!

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