The construction of roads and highways has gathered pace since 2014 but the targets announced in the Union budget for 2022-23 appear unrealistic, experts associated with the infrastructure sector have said. The finance minister had stated that 25,000 km of national highways would be constructed this year.
Such targets can be met only if an average of 70 km of highways are constructed every day all through 2022-23. While this will provide strong visibility of the order book of construction companies, the pace of project execution was still a cause for concern in the sector, analysts said.
“It is good to have a minister like Nitin Gadkari who publicly professes targets. However, it will be very difficult to meet the target set for 2022-23, even though highway construction has risen to around 50 km per day at different points in the last two years,” an independent industry expert said.
The pace of highway construction had slacked earlier this year. The original target for constructing 14,000 km has already been reduced to 12,000 km. Ministry of road transport and highways data shows that just 5,118 km were constructed between April and November of 2021-22—or just 21 km a day, which is less than a third of the target of 70 km a day in 2022-23.
Experts in the sector attribute the slow pace of execution in 2021-22 to delays in the financial closure of the projects and excessive monsoon rains.
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“The comparatively small decline in the speed of implementation in the current fiscal relative to the last fiscal is perhaps driven by more immediate issues, such as the impact of work of the site on account of the second wave of the pandemic, and the delays in the financial closure for the projects during the pandemic,” said Neelakantan V R, partner, Shardul Amarchand Mangaldas & Co.
“Processes like financial closure, which follow contract award, have been impacted,” said Kushal Singh, partner, Deloitte India. He added that the pandemic has disrupted the entire chain of events post the project award.
Government officials said that the outbreak of the second wave of COVID-19 and farmer protests also contributed to the slower road construction pace seen in 2021-22. They added that the speed of road construction has picked up significantly since January and the government was likely to meet its revised target of 12,000 km set for 2021-22.
Road Secretary Giridhar Aramane told Moneycontrol that the pace of road construction in 2022-23 will be further increased to achieve the targeted expansion of national highways in the next fiscal.
Senior officials at the National Highways Authority of India (NHAI) are also confident of a better performance in 2022-23, both in terms of asset monetisation and road construction.
“The negotiations of the first infrastructure investment trust (InvIT) unfortunately took a lot longer than expected due to the COVID-19 pandemic outbreak and some laws around investments in the InvIT,” said a senior official.He added that now with the success of its first InvIT, the NHAI will look at more such opportunities and was already looking to complete the launch of its second InvIT before the end of 2021-22.