GoI plans to build 12,000 km of roads at an estimated cost of Rs 1 lakh crore in 2009-10 The focused approach by the Ministry of Road Transport and Highways (MORTH) in building a web of world-class highways in India is likely to give fillip to the government’s overall infrastructure development, triggering the country’s economic growth in the near future.
According to the neoclassical growth theory, highways play a three-pronged role in the country’s economic development, which are as follows:
GOI’s plans
The Government of India (GoI) plans to build 12,000 km of roads at an estimated cost of Rs 1 lakh crore in the current financial year, preferably on the toll collection mode. To achieve this, Kamal Nath, the Union road transport minister, is actively pushing for mega projects to attract foreign players. The mega projects will build highways of over 500 km, involve contracts worth Rs 4,000-5,000 crore and a concession period within a 30-50 year range.
In a major boost to the sector, the government has currently approved eight highway development projects, of which six are in Jammu & Kashmir, one each in Karnataka and Haryana.
“Despite all efforts, monthly data shows that road construction is still limping at around 3-6 km a day, which is far behind Mr Nath’s ambitious target of building 20 km of highways per day,” says N C Roy, proprietor of Ober Construction Enterprises (P) Ltd, a mid-sized construction firm in Kolkata. Mr Roy further pointed out that this pitiable situation is mainly due to two major bottlenecks - delay in land acquisition and lack of investments.
 GoI’s approach to challenges
Some of the tricky clauses—pertaining to qualification parameters, termination and forfeiture of deposit money, among others—mentioned in bid documents (request for qualification, RfQ and request for price, RfP) as well as in model concession agreements were keeping big players away from investing in mega road projects in India.
In a bid to solve this, the matter was taken to the Cabinet Committee on Infrastructure headed by the Prime Minister and a decision was taken in early October. Since the decision was not made public, an anxious situation prevailed among the construction firms and even in the Road Transport Ministry. Putting all speculations to rest, Mr Nath currently announced that all aforementioned procedural bottlenecks have been removed and henceforth all decisions related to amending of the RfQ and RfP will be taken by the Road Transport Ministry.
“This move by the government is no doubt praiseworthy as it will attract more bidders, thereby creating stiff competition,” says Sarang Panchal, proprietor of Smart Spaces, a mid-sized construction firm in Mumbai.
Furthermore, to attract more foreign direct investment (FDI) in the sector, the Road Transport Ministry is sending delegations to various countries like the US.
Going forward, with the Centre and the state governments seeking innovative means to solve land acquisition delays, faster implementation of projects are expected, consequently giving the road and highways sector a quantum leap and helping in paving the way towards a thriving economy. Jeeta Bandopadhyay |
