THE massive development of new expressways, highways and major roads across India in recent years should have helped relieve traffic conditions in the country, but average motorists are finding it extremely difficult to travel between cities within the given time frame.

Unfortunately, India’s ambitious road-building projects have also taken a hit due to various factors that have blocked highway projects. Even the central government is aware about the problems and despite various moves has failed to overcome these challenges.

Last week, road transport and highways minister Nitin Gadkari admitted as much when he expressed displeasure over the slow pace of highway construction.

There are frequent disputes between the central and state governments and local civic bodies and even village panchayats over the development of new roads

While the National Democratic Alliance government has set an ambitious target of constructing 40 km of highways a day, it has barely managed to meet its targets. As against a target of 15,000 km of highways to be constructed during the year, it has achieved just about 6,600 km till February end.

Gadkari blames the system for the delays in executing highway projects in the country. “It is because of the system,” he notes. “Everywhere there are committees. You have to go to a particular committee for BOT (build-operate-transfer); then if there is no response you have to go to another committee for EPC (engineering, procurement and construction).”

According to him, the National Highways Authority of India (NHAI) should be given a lot more power to fast-track road projects. “I am not happy with their targets,” he says. “We have to strengthen their power and I am hopeful that the cabinet will enhance it soon.”

Earlier this month, Gadkari’s junior, P Radhakrishnan, the minister of state for road transport and highways, told parliament that the slow pace of highway construction was mainly because of land acquisition problems. Other issues included shifting of utilities, poor performance of contractors, delays in getting environmental clearances, differences with the Indian Railways and public agitation.

Of course, fast expressways and highways have been built to link cities such as Mumbai and Pune, Mumbai and Ahmedabad, Delhi and Agra and several other major urban hubs. However, many of these projects were delayed by years and the construction costs shot up phenomenally because of these delays.

The development of highways has been a major problem in India because of a range of factors. There are frequent disputes between the central and state governments and local civic bodies and even village panchayats over the development of new roads.

The other significant problem is acquisition of land, as many farmers do not want to give away their land at low prices. Farmers have often accused politicians and bureaucrats of acquiring land from them at cheap rates, but selling them off to developers at a later stage at high prices.

Concerned about the inordinate delays in developing new highways, especially at a rate of more than 40 km a day, the Prime Minister’s Office (PMO) plans to maintain a close watch on these projects from now onwards. The central cabinet is planning to include Amitabh Kant, a former bureaucrat and now the CEO of Niti (the National Institution for Transforming India) Aayog — which replaced the Planning Commission when the Narendra Modi government came to power in 2014 — in the NHAI board.

The move will speed up clearances of new projects, which generally get caught in different ministries and government departments.

THE government has stepped up investments in the construction of national highways with finance minister Arun Jaitley earmarking Rs640bn in the recent budget for construction of roads and highways. The NHAI aims to award 15,000 km of new road projects by the end of this month.

But total investments in the roads and highways sectors could easily touch a trillion rupees this year. Besides the money allocated in the budget, the government is also taking up projects for construction of roads in villages (Pradhan Mantri Gram Sadak Yojana — Prime Minister’s project for development of village roads). And NHAI will be raising about Rs150bn through sale of bonds.

According to Jaitley, there were more than 70 languishing projects at the beginning of the year because of ‘legacy factors.’ The total length of these projects was 8,300 km and involving investments of Rs1trn. “Nearly 85pc of these projects have been put back on track,” he said.

Of the more than five million km of road in India, a mere two per cent constitute national highways. But 40pc of the road traffic uses these highways. Gadkari is determined to double the length of national highways to 200,000 km and expects 80pc of national traffic on them.

The government’s decision to sharply increase the length of national highways will see it earn substantial revenues through toll charges. India has faced major issues with tolls, as thousands of motorists refuse to shell out money for using the national highways.

State governments constantly waive toll charges, especially after opposition parties agitate against the payment for use of highways. Maharashtra, for instance, has virtually removed toll from most highways — except the Mumbai-Pune expressway — putting developers under enormous pressures.

Crisil Research, a leading research house, last week estimated that about 6,500 km of highways are being maintained by the NHAI using public funds. This number is expected to double over the next five years.

The agency, however, estimates that the first 75 operational highway projects tendered under the toll-operate-toll (TOT) model may fetch around Rs400bn, much lower than what the government had initially estimated.

This would happen because investors would factor in the freight-heavy nature of national highway traffic in India, the associated volatility, and the reduction in road freight growth expected after the implementation of the Dedicated Freight Corridor (DFC) by Indian Railways.

“Variation and volatility in traffic can reduce returns,” remarks Prasad Koparkar, senior director, Crisil Resarch. “Investors would take a hard look at this, including the impact of the Dedicated Freight Corridor and General Sales Tax, when placing bids. They would also be wary of latent defects in roads that are not detected during technical examination.”

Another grey area pertains to competing roads; if an alternate route is built and is longer than the original stretch by 20pc, then it is not treated as a competing route.

Published in Dawn, Business & Finance weekly, March 27th, 2017