Govt raises highway building target for FY24 to 14,000 km from 12,500 km

A construction site

Buoyed by the rise in pace of road construction in the first quarter of the financial year 2023–24 (FY24), the central government is looking to increase the highway-building target for the current year.

"The road construction target for 2023–24 is being raised to 14,000 km from the 12,500 km that was earlier decided," Secretary at the Ministry of Road Transport and Highways of India MoRTH, Anurag Jain, said.

He added that out of the 14,000 km, the National Highways Authority of India (NHAI) has been given a target to create 6,000 km of roads, MoRTH will construct another 6,000 km, and the National Highways & Infrastructure Development Corp will build another 2,000 km of roads.

According to data from MoRTH, the pace of road construction in India rose 9.4 percent on-year in the first quarter of this financial year.

Around 2,150 km of roads were constructed in April–June, higher than the 1,966 km built during the same period last year.

The pace of road construction rose significantly in May and June after getting off to a slow start in April, which boosted overall construction for the quarter.

Senior officials from MoRTH said that the early monsoon in parts of the country impacted the pace of road construction, which would have been even higher if not for the rains.

Officials added that the government is looking to boost road construction across Odisha, Tamil Nadu, Karnataka, Maharashtra, and Madhya Pradesh as part of its increased road construction target for 2023–24.

"Due to land acquisition issues, some highway projects in these states were on hold last year. Now that these issues have been addressed, we expect to boost highway construction in these states," a senior official from MoRTH said.

Another official said that despite the upcoming state assembly election in December, the pace of road construction in India is likely to remain strong as many projects that were earlier stuck due to issues related to land acquisition and payments have been cleared.

Road Minister Nitin Gadkari had earlier asked officials to ramp up the pace of construction to around 40 km per day from the present 34 km per day target.

The central government is looking to ramp up highway construction across the country ahead of the upcoming Lok Sabha elections in 2024.

The road transport ministry will spend 91 percent of its budgetary allocation of Rs 2,58,606 crore by December this year, a government official said. He added that the actual expenditure as of May-end was Rs 59,078 crore.

MoRTH will prefer a mix of engineering, procurement, and construction (EPC), hybrid annuity, and build-operate-transfer (BOT) modes to construct roads in 2023–24.

Despite the optimism of the road ministry, industry experts and analysts expect a slowdown in the pace of road construction in 2023–24 compared to the previous year.

ICRA Research expects the award of road sector projects to fall by a sharp 25 percent in 2023-24 in the run-up to the general elections.

So, only around 9,000 km of highways may be awarded in FY24, compared to over 12,000 km in FY23, ICRA said in its report.

The expected decline is similar to the trend seen ahead of the 2019 general elections, when awards fell even more sharply from over 17,000 km in 2018 to just about 5,500 km, ICRA said.

ICRA forecasts a 16-21 percent on-year increase in road execution activity in 2023-24 to 12,000-12,500 km, which is much lower than the 14,000 km target being considered by the government.

The central government, in 2022-23, had managed to construct around 10,993 km of national highways, missing its target of 12,500 km.

MoRTH has missed its highway construction target for the last two years.

The pace of construction of national highways in India peaked during the pandemic-hit 2020-21, when lockdowns helped accelerate construction, touching a record high of 37 km a day and resulting in a record 13,327 km of highways built.

For 2021-22, the road ministry initially aimed to construct 14,600 km of highways at a pace of 40 km per day. However, it later revised the goal to 12,000 km, but the ministry managed to construct only 10,457 km in 2021-22.

Similarly, for 2022-23, the target was set at 12,500 km, even though Gadkari had previously suggested that 18,000 km of highway construction at a daily rate of 50 km could be considered.