Besides the record Rs 82,000 crore envisaged earlier as public funds for construction and maintenance of highways in the current fiscal, the road ministry has asked for an additional Rs 8,800 crore as budgetary support. The new demand, road transport and highways secretary Vijay Chhibber wrote to finance secretary Ratan P Watal recently, was in keeping with “our preparedness, committed liabilities and the progress of works”.
Of the current Budget estimate (BE) of R45,518 crore for support to the road ministry, some R42,000 crore is for construction and maintenance of highways, including around R39,850 crore for the national highways. An additional R40,000 crore is being mobilised through tax-exempt bonds.
Official sources said that the additional funds requisition was just “indicative” of the requirements of the ministry, which would “certainly be higher” when the final estimate is prepared later this month. The ministry’s move is as per PM Narendra Modi’s advice that funds should be sought sufficiently in advance so that projects don’t suffer due to their paucity as in the past, they added.
While award of new highway projects had picked up since last fiscal, construction has gathered momentum in recent months — about 2,000 km of highways have been built in April-August 2015, compared with about 1,700 km in the whole of last fiscal (see chart).
With an unparalleled 11,500 km of highway projects awarded since the start of last fiscal, the construction is bound to accelerate further in the coming months. (The minister for road transport and highways, Nitin Gadkari who has set an ambitious goal to increase the road construction to 30 km a day, has recently announced a plan to award projects worth Rs 3.5 lakh crore “in the next six months”).
The sources said that although a large segment of the new awards would be under the conventional engineering, procurement and construction (EPC) model, the public private partnership (PPP) segment is also looking up thanks to “right-sizing” of projects, the policy that four-fifths of the required land will be in the government’s possession before PPP projects are awarded and the hybrid model which reduces the risks borne by the private developer. With revival of investor interest in the sector, banks are also being prodded to step up advances to developers of highway projects.
According to the road ministry, over 4,100 Km of national and state highways projects have already been awarded till the end of August this year out of the targeted 10,000 Km for the current fiscal year. The pace of construction now is 13.3 Km per day.
Of the road ministry’s demand for additional budget outlay, Rs 2,620 crore is for awarding contracts for building additional national highways, which has been targeted at around 10,000 km this fiscal, and Rs 1,510 crore for special accelerated road development programme for the North-East. It also intends to enhance the non-Plan outlay for maintenance and repair of national highways by Rs 1,000 crore from the BE to Rs 3,700 crore.
Chhibber wrote: “I may, however, emphasise that an early indication regarding availability of additional outlay would facilitate better planning of our expenditure as well as ensure that the momentum in progress of works by all our agencies during the working season is sustained.”