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State of Indian Roads
Length of Roads in India
Indian road network of 33 lakh Km is second largest in the world
About 65% of freight and 80% passenger traffic is carried by the roads. National Highways constitute only about 1.7% of the road network but carry about 40% of the total road traffic. The nNumber of vehicles has been growing at an average pace of 10.16% per annum over the last five years.
Top 5 states with major share of highways are UP, Rajasthan, Maharashtra, Karnataka and Ap. On the other hand, top 5 states with least share of highways are Goa, Sikkim, Nagaland, Meghalaya, Mizoram
Following are the policy initiatives to attract private investment
- Government to carry out all preparatory work including land acquisition and utility removal.
- Capital grant up to 40% of project cost to enhance viability on a case to case basis
- 100% tax exemption for 5 years and 30% relief for next 5 years, which may be availed of in 20 years.
- Concession period allowed up to 30 years
- Arbitration and Conciliation Act 1996 based on UNICITRAL provisions.
- Entrepreneurs are allowed to collect and retain tolls in BOT projects
- Duty free import of specified modern high capacity equipment for highway construction
- Projects < 500 Cr to be awarded by highways secretary, 500-1000 Cr by road transport and highways minister, only projects >1000 Cr need Union cabinet approval.
Time taken to complete a project is on an average 2-2.5 years
Funding Mechanism: The financial arrangement for the development of GQ and the corridors has been made as:
- Cess Rs 20,000 Cr
- World Bank/Asian Development Bank Loan Assistance Rs 20,000 Cr
- Market Borrowings Rs 12,000 Cr
- Private Sector Rs 6,000 Cr
- Total Rs 58,000 Cr ($ 12.6 Bn)
Two Key projects worth mentioning are:
- Golden Quadrilateral which includes 5,846 Kms connecting Delhi-Kolkata-Chennai-Mumbai
- NSEW Corridors which includes 7,300 Kms connecting Kashmir to Kanyakumari including Salem to Cochin Spur and Silchar to Porbandar
The pace of awards and construction of projects definitely quickened after the NDA government coming to power. A record 16,271 Cr worth projects were awarded in FY17. The rate of construction has almost doubled from just 11 km/day in 2011-12 to over 22km/day in 2016-17. Though this was much lesser than the target 30 ms/day by the govt but still commendable. The target for FY18 is 40 km/day. With the government's focus on infrastructure, it certainly augurs well for infrastructure companies in the coming years.