To overcome lack of adequate private sector investment in constructing highways, the Centre plans to accelerate projects on its own, which could see a doubling of allocation for the sector to ₹45,000 crore in the forthcoming Budget.
"We have asked for a hefty allocation and there is good chance we will get it," said a ministry official, reports The EconomicTimes.
The allocation of money is seen as critical to revive the highways sector, which is likely to have a target of constructing about 8,500 km of roads next fiscal.
Though the current year too has a similar target, the Modi government could award contracts for only about 4,000 km.
The ET report says that the pace of road construction by the National Highway Development Project (NHDP) decelerated to 3.2 km per day during the pril to October 2014 period, from 4.3 km per day in the corresponding period a year ago.
However, experts feel that though money is a critical factor, there are many sticky issues to be dealt with. "Land acquisition, permissions for rail overbridges, etc., need to be kept ready so that projects can take off," Manish Agarwal, leader - capital projects and infrastructure at PwC India, said.
The government's plans to take the engineering, procurement and construction (EPC) route to expedite road projects has not found favour with experts.
"In the case of EPC contracts, the quality of the roads constructed has been usually poor as the EPC contractor has no stake in the roads constructed by it, once it is handed over to the government," a recent study by Crisil and PHD Chamber said.
It is pertinent here that almost three-fourths of the road project contracts have been awarded using the EPC mode.
To achieve the road construction target of 30 km per day set by Road Transport and Highways Minister Nitin Gadkari for the next two years, the government has proposed to ensure adequate funds for projects hit by cost escalation.
The National Highways & Infrastructure Development Corporation, formed last July with special focus on road projects in the North-East, is likely to end the year short of its target.
"By the end of current fiscal, India will be able to construct 3,500 km of roads and highways against the target of 5,000 km", its managing director Anand Kumar said.
The higher allocation of funds, if it materialises, would come in handy for projects awarded this financial year and where payments are due next year.
