3 Years of Modi: Hits and misses of Road Transport & Highways Ministry

“If you want to get rich, you have to build roads first,” goes a Chinese proverb. And John F Kennedy had famously said: “American roads are not good because America is rich, but America is rich because American roads are good.”

That philosophy has certainly worked for both China and the US. And Highways Minister Nitin Gadkari is trying his best to ensure that India emulates them.

Development of roads and highways is one of the priority areas for the Narendra Modi-led government. The Road Transport and Highways Ministry has set itself a target to increase the length of national highways to 2 lakh km.

Three years into the NDA government’s tenure, the results have been mixed. Here is an update on the progress:

The Misses

The National Highway Authority of India (NHAI) lagging its target of 15,000 km of road projects for the year ending 31 March, 2017.

For 2016-17, the plan was to award 25,000 km railway projects – 15,000 km by NHAI and the rest 10,000 km by the Ministry of Road Transport and Highways.

However, the data compiled by the ministry shows NHAI has completed 8,231 km of construction and awarded 16,271 km of highways in 2016-17.

These include projects under under the build, operate, transfer (BOT), hybrid annuity model (HAM) and engineering, procurement, construction (EPC) models.

According to India Ratings & Research, the road awarding pace fell by 20 percent in the first nine of FY17 due to weak liquidity environment in the sector.

In a recent meeting, the Minister for Road Transport and Highways of India Nitin Gadkari has issued an ultimatum to NHAI officials to achieve the target of 40 km of roads a day.

For this, the ministry plans to set up a high-powered conciliatory committee consisting of three general managers of the NHAI.

In BOT, 436 arbitral awards have been pronounced. While 151 arbitral cases have been resolved, 199 cases are still pending at various stages.

The Hits

The ministry has certainly increased its daily road construction target to 20 km a day in February 2017 as compared to 16 km a day in 2015-16. However, the recent number is still lower than the targeted 41 km a day.

The ministry has constructed 10,471 km of national highways during the last two financial years 2014-15 and 2015-16.

In 2016-17, the ministry awarded 15,958 km of highway projects, a jump of nearly 60 percent from previous fiscal.

In FY17, over 26,000 km of four or six-lane highways have been constructed.

NHAI is planning its first ever highway project in Northeastern region — the Brahmaputra Express Highway — which will be developed at an estimated investment of Rs 40,000 crore. NHAI plans to complete the 1,300 km highway in about 3 years.

In May 2014, when NDA had come to power, things were particularly bad for the highways sector with as many as 73 projects involving a length of nearly 8,200 stalled, locking up investments worth Rs 1 lakh crore., Gadkari said in an interview to PTI.

Electronic toll collection - The government launched a pilot project - National Electronic Toll Collection (NETC) - at some toll plazas for electronic toll collection earlier this year.

NETC has been clocking six to seven million transactions a month, according to National Payments Corporation of India. The project, still in its trial phase, is expected to be launched in May across the country.

What next?

The government aims to build at least 90,000 km of highway network in its 5-year tenure. For this, it plans to build 25,000 km of highway in current fiscal and another 30,000 km in the next.

To bring in more funds, the NHAI plans to sell Rs 5,000 crore worth of masala bonds or rupee-dominated bonds in the international market. The funds will be used for construction of highways, tunnels and economic corridors in the country.

As a matter of fact, according to some reports NHAI is expected to list the masala bonds at London Stock Exchange (LSE) this month.

The ministry also plans to monetise highway projects worth Rs 14,500 crore.

Electric taxi project — Gadkari plans to launch the country’s first electric taxi project this month. The pilot project with 200 taxis will be launched in Nagpur.

The plan is a part of the government’s larger initiative to shift to electric vehicles by 2030, as per the reports.

Closed toll policy — The ministry is mulling a ‘closed toll policy’ where the toll will be charged on basis of distance covered on the toll road. Currently, the toll is fixed for the entire road irrespective of the distance travelled.

Full coverage: Three years of Modi government