Road Orders in Slow Lane as They Fall to Tenth of India's Target
Modi’s government has miles to go to achieve its annual road-building goal.
(Bloomberg) -- Prime Minister Narendra Modi’s government has miles to go to achieve its annual road-building goal.
The National Highway Authority of India aims to agree contracts for 10,000 kilometers in the year to March, but has managed to award only a little over a one-tenth of the total so far, data from the Ministry of Road Transport and Highways show.
“There’s a chance that FY18 awards could see a decline for second consecutive year," Atul Tiwari, an analyst at Citigroup Global Markets India Pvt. wrote in a Dec. 14 note. “The muted pace of awards will have an impact on construction activity in road sector.”
NHAI is at the center of the Modi government’s plan to spend $108 billion over the next five years on building highways to boost an economy that’s growing at its slowest pace in three years. But delays in acquiring land -- NHAI doesn’t award a project until it gets 80 percent of the land -- and the reworking of tenders after the implementation of the nationwide sales tax on July 1 contributed to the slowdown in bidding out projects.
With less than four months to go until the financial year ends, NHAI is making all-out efforts to meet the goal. It plans to invite bids for 3,500 kilometers by the end of December, taking the tender invitation total since April to 8,400 kilometers, according to a Dec. 12 statement from the roads ministry.
“The last quarter is typically the best in terms of project awarding," said Alok Deora, an analyst at IIFL Wealth Management. Deora said he expects the NHAI to roll out 5,000 to 5,500 kilometers of projects in the January-March quarter to end the financial year with orders for about 6,500 kilometers.
To contact the reporter on this story: Dhwani Pandya in Mumbai at dpandya11@bloomberg.net.
To contact the editors responsible for this story: Candice Zachariahs at czachariahs2@bloomberg.net, Ravil Shirodkar
©2017 Bloomberg L.P.