In what augurs well for the sector, there has been 18% y-o-y growth in road construction in the first seven months of FY19.
Notwithstanding the monsoon blues that hit work in recent months, highway construction logged a robust 18% y-o-y growth in the first seven months of the ongoing fiscal, taking the construction rate for the April-October period to 23 km/day, as against 19.45 km/day clocked in the corresponding period last fiscal. The overall figure for the last fiscal stood at a record 26.9 km/day.
All government agencies responsible for highway construction bettered their tally in the first seven months of FY19. The Ministry of Road Transport and Highways (MoRTH) built 3,107 km of highways during the April-October period, as against 2,623 km in the corresponding period last fiscal. The National Highways Authority of India (NHAI) improved its performance to 1,579 km from 1,375 km a year earlier. The National Highways and Infrastructure Development Corporation (NHIDCL) increased its tally to 144 km from 87 km in FY18.
MoRTH implements projects largely via the engineering, procurement and construction (EPC) route wherein the government bears all project costs. NHAI projects are now increasingly being built through the hybrid annuity model (HAM), an improved version of the public-private partnership (PPP) model in which the government bears 40% of project costs.
Significantly, Roads and Highways Minister Nitin Gadkari has set an ambitious target of building 16,418 km of highways in the ongoing fiscal, at a staggering 45 km/day. MoRTH, which builds national highways (NHs) through state public works departments (PWDs), has been mandated to construct 9,698 km and the NHAI, 6,000 km of roads. NHIDCL has been entrusted with building 720 km of NHs in the fiscal. A record 9,829 km of NHs were built in FY17-18. The figure was 8,231 km in 2016-17, 6,061 km in 2015-16 and 4,410 km in 2014-15.
When the Narendra Modi government assumed power in May, 2014, the construction rate stood at 11.67 km/day. Under the new regime, it grew to 12 km/day in 2014-15, 16.6 km/day in 2015-16, 22.5 km/day in 2016-17 and 26.9 km/day in 2017-18.
However, the scenario is not so positive on the award front, with only 1,942 km of projects having been awarded so far this year. The road ministry had fixed the project award target for the fiscal at 20,000 km, an increase of 25% over the record 17,055 km awarded in the last fiscal.
Of the 20,000-km target for the year, MoRTH was mandated to award 8,652 km of projects, NHAI, 7,397 km and NHIDCL, 1,006 km of projects. As of October-end, MoRTH has awarded 1,519 km of highway projects, NHAI, 372 km and NHIDCL, 51 km of projects.
Though funds are not a constraint, acquisition of land for project awards remains a problem. Analysts say the fact that projects are not awarded without 90% of land having been acquired for EPC projects and 80% for HAM projects has posed a challenge. With the country heading towards the next general elections, the government is also focussed more on execution than awards.
Earlier in the year, the minister had said, “Our ministry is making all out efforts to improve and strengthen the highway network in the country. This year the focus would be more on construction, though the award would be more than last year.”