The road sector has always been a high priority area for the government. While project implementation hit several roadblocks, it has picked up visibly in the past few years. In a written response to Indian Infrastructure’s questions, Nitin Jairam Gadkari, Union Minister, Ministry of Road Transport and Highways, Ministry of Shipping and Ministry of Water Resources, River Development and Ganga Rejuvenation, shares his perspective on the state of the road sector, the progress in the past four years and the outlook going forward…
How do you assess the progress and achievements made in the road sector over the past two decades?
The road sector in the country received high priority under the first NDA government in 1998. Recognising this sector as one of the biggest enablers of socio-economic growth, the then government worked on the widening, rehabilitation and upgradation of nearly 49,260 km of highways through the Golden Quadrilateral project, the North-South-East-West Corridor project and various phases of the National Highways Development Programme.
However, in the period before the present government took over, the pace of development was very slow. The rate of construction was just 12 km per day in 2014, and it was even lower in the preceding years. National highway projects totalling 8,310 km, involving an estimated capital investment of around Rs 1 trillion, were stalled. The primary reason was that these projects were awarded without adequate project preparation. Other reasons included land acquisition and utility shifting issues; non-availability of construction materials like soil and aggregate; delays in obtaining statutory clearances like environment and forest clearances, and railway approvals; contractors/concessionaires’ cash flow-related constraints; state government-specific issues; and contractual disputes.
We took up the challenge posed by the sector, and have worked methodically to remove all roadblocks. Today, almost all languishing projects have been brought back on the rails. While national highways carry nearly 40 per cent of the traffic, they constitute only about 2 per cent of the country’s total road network of 5.48 million km. This leads to the inefficient movement of traffic, raises logistics costs and endangers road safety. We were determined to remove this anomaly and expand the national highway network to 200,000 km. Our efforts are showing results. Today, India has over 122,434 km of national highways. We are constructing highways at the rate of 27 km per day as against the prevailing rate of 12 km per day when we took over. Between 2014-15 and 2017-18, we awarded 51,073 km of national highway projects and constructed 28,531 km as against the 25,158 km awarded and 16,505 km constructed between 2010-11 and 2013-14.
In fact, 2017 has been a milestone year for the Ministry of Road Transport and Highways (MoRTH). While the period from 2014 to 2016 was utilised for the purposes of reform and course correction, 2017 witnessed consolidation, culmination and the roll-out of a new roadmap for the highways sector. We have launched the Bharatmala Pariyojana, India’s largest- ever highway development programme, which promises to optimise the efficiency of road traffic movement across the country by bridging critical infrastructure gaps. Special attention has been paid to the connectivity needs of areas of economic activity, places of religious and tourist interest, border areas, backward and tribal areas, coastal areas and trade routes with neighbouring countries under the programme. Multimodal integration is one of the key focus areas of this programme. Around 53,000 km of national highways have been identified to improve national corridor efficiency. Of this, 24,800 km will be taken up in Phase I, which will be implemented over a period of five years, that is, from 2017-18 to 2021-22, in a phased manner. This includes 5,000 km of national corridors, 9,000 km of economic corridors, 6,000 km of feeder corridors and intercorridors, 2,000 km of border roads, 2,000 km of coastal roads and port connectivity roads, and 800 km of greenfield expressways. The total fund provision for Phase I of Bharatmala Phase I is estimated at Rs 5.35 trillion. Bharatmala will be a major driver for economic growth in the country. The programme once implemented will optimise the efficiency of movement of goods and people across the country through well-connected corridors, and connect all 550 districts in the country through national highway linkages.
The year 2017 can also be seen as a major turning point for transport planning in the country, with the idea of multimodal transport development gaining ground. In May 2017, the MoRTH organised the India Integrated Transport and Logistics Summit and actively promoted multimodal transport planning. The Reserve Bank of India appreciated the highway infrastructure development sector in its Annual Report 2016-17, noting that there has been a decline in cost and time overruns of Rs 1.5 billion, as well as in stalled projects, both in terms of value and numbers. Moody’s Investors Service has also upgraded the issuer ratings of the National Highways Authority of India (NHAI) to Baa2 from Baa3, and revised the outlook to stable from positive.
What have been the most significant policies /programmes that have shaped the sector?
We have put in a lot of effort to break impasses, remove stumbling blocks, and create a conducive environment for work to progress smoothly. For the languishing projects, we have taken proactive steps to identify the bottlenecks and address them through appropriate policy initiatives. These include the securitisation of future cash flows in build-operate-transfer (BOT) projects, premium deferment and harmonious substitution in financially stressed projects, the Uniform Exit Policy, one-time fund infusion, and rationalised compensation to concessionaires in case of delays not attributable to concessionaires.
We have brought in innovative funding models like the hybrid annuity model (HAM) and monetisation of public-funded highways. The land acquisition process has been streamlined and we have made a rule that no projects will be awarded till 80 per cent of land has been acquired. We also lay a lot of emphasis on interministerial coordination to sort out issues. Further, we are emphasising the quality of detailed project report (DPR) preparation and the use of latest technology at various stages of road planning and construction. All these efforts will ensure that we are able to meet our objective of providing world-class transport infrastructure to the country.
How has the role of PPPs evolved in the road sector? How do you expect the implementation models to shape up in the next few years?
Public-private partnerships (PPPs) have grown steadily in the highways sector. Before this government took over, private investment in the sector had been declining due to several reasons like delays in approvals and cost overruns, but we took several policy decisions to remove these roadblocks. All these steps have resulted in reduced delays. Meanwhile, HAM has been successful in reviving PPPs in the roads and highways sector. Besides under the toll-operate-transfer (TOT) model, the bid for the first bundle for nine national highways with a total length of about 700 km was won by a company for Rs 96.81 billion as against the government’s expectations of Rs 62.58 billion. We are now calling bids for the second bundle. Besides, NHAI launched an issue of masala bonds at the London Stock Exchange in May 2017. The issuance saw an overwhelming response from a wide spectrum of investors. The initial benchmark issue of Rs 15 billion was upsized to Rs 30 billion. Very recently, the SBI has given an unsecured loan of Rs 250 billion to the NHAI for 10 years with three years of moratorium on repayments. This is the largest loan amount to have been sanctioned to the authority in one stroke by any institution. This is also the largest long-term unsecured loan sanctioned by SBI at a time to any entity.
What are the ministry’s top priorities and focus areas in the transport sector for the next two to three years? What is your outlook for the transport sector?
The ministry’s top priorities include providing world-class transport infrastructure that is efficient in terms of speed and convenience of travel, safe for commuters in terms of accidents and associated fatalities, cost-effective so that logistics costs for Indian products can be reduced, indigenous, and environment friendly.
The Bharatmala Pariyojana is at the centre of our priorities for the next few years. Another key priority is to reduce road accident fatalities by 50 per cent. To this end, we have identified 789 black spots across the country and are working to rectify these. Road safety features are being incorporated in DPRs and we are carrying out road safety audits. We are running a scheme for opening driver training institutes at district levels, and running public awareness programmes in this regard. In addition, we have notified rules to ensure automobile safety. We are also bringing in a new legislation, the Motor Vehicle (Amendment) Bill, 2017. The bill provides for stiffer penalties, permitting electronic enforcement, improving fitness certification and the licensing regime, statutory provisions for the protection of Good Samaritans and recognition of information technology-enabled enforcement systems. The bill also paves the way for reforms in public transport, which in turn will help in improving road safety. The bill contains provisions for the treatment of accident victims during the golden hour to help in saving precious lives. It also aims to simplify processes for the citizens dealing with transport departments and usher in an era of transport reforms in the country. The bill has been passed by the Lok Sabha.
Making the road sector environment friendly is another priority for us. We are doing this by encouraging the use of alternative fuels like ethanol, methanol, biodiesel, and biocompressed natural gas and electricity in the transport sector. Emission norms have been notified. We have decided to implement the BS-VI emission standards in the country from April 2020. We are also working towards strengthening the public transport system. The MoRTH has introduced a scheme to provide financial assistance to the states for this. Also, the electronic toll collection system has been implemented on a pan-India basis so as to remove bottlenecks, and ensure the seamless movement of traffic and collection of user fee as per the notified rates, using passive radio frequency identification technology.
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