Highways construction bucks Modi 1.0 trend; activities in the sector slow down in current financial year

Bucking the trend of a steady increase in the pace of highway construction since the Modi 1.0 government assumed office, activities in the sector seem to have slowed in the current financial year. With award of new projects being in the slow lane since FY19 (see chart), investments in this key infrastructure sector could take a further hit if efforts to encourage private investments and newer ways of resource mobilisation explored by NHAI don’t yield intended results.

Construction of highways slowed to 27 km a day during April-January in the current fiscal, from 29.7 km a day achieved in all of 2018-19. Also, awards of new projects in the first 10 months of the current year were only 35% of the targeted 10,000 km for the whole fiscal.

Against the combined target of building 11,000-km highways in the current fiscal by all agencies — NHAI, ministry of road transport and highways (MoRTH) and NHIDL — the achievement till the first week of February was 8,100 km. MoRTH has built 4,700 km of highways in the period, NHAI 3,024 km and NHIDCL, 376 km. For the current fiscal, NHAI’s target for construction was set at 4,500 km at the beginning of the year while the rest was to be done jointly by MoRTH and NHIDCL.

MoRTH largely implements projects through the engineering, procurement and construction (EPC) route where the government bears all the project costs. Most NHAI projects have till recently been built through the hybrid annuity model (HAM)

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