NHAI: Road Construction Pace Jumps In Pandemic-Marred Year
Traffic moves along National Highway 7 as road construction takes place in Bangalore, India, (Photographer: Namas Bhojani/Bloomberg)

NHAI: Road Construction Pace Jumps In Pandemic-Marred Year

India is building more road in a day this fiscal over the last as the government ramps up infrastructure spending to boost a pandemic-hit economy on track to contract first time in decades.

The Ministry of Road Transport and Highway has constructed 8,169 kilometres of national highways from April 2020 to Jan. 15, 2021, or about 28.16 km a day, according to a government statement. That compares with 7,573-km roads at a pace of 26.11 km a day the year earlier.

The execution for FY2021 could surpass 10,500 km given the thrust on Bharatmala project, according to ICRA, compared with 10,237 km of roads constructed in the last fiscal.

Total awarding of road projects more than doubled over the previous year. The Ministry of Road Transport and Highway has awarded projects of 7,597 km from April 1, 2020, to Jan. 15, 2021. That compares with 3,474 km in the corresponding period a year earlier and 8,948 km in full FY20.

Nearly all the ministry's road projects are handled by the National Highways Authority of India. The state-run road builder awarded 67 projects spanning more than 2.02 lakh kilometres with a capital cost of over Rs 79,200 crore in nine months ended December, according to a NHAI newsletter. The road builder awarded on toll-operate-transfer three bundles and received an upfront payment of Rs 5,011 crore during the period.

The government took measures to provide liquidity during the pandemic, according to ICRA. The road ministry initiated a slew of relief measures like the shift from milestone-based billing (typically ranging between 45 and 75 days) to monthly billing, and release of retention money or performance security in proportion to the work already executed, among others, the rating agency said, adding that it has immensely helped road contractors.

“FY2022 remains a crucial year for two reasons: the importance of government spending to revive the economy and significant catch-up to do in the ongoing Bharatmala and allied programmes,” said Shubham Jain, senior vice president, corporate ratings, at ICRA. The capital outlay is required to be increased by at least 15%, supported by an increase in budgetary allocation to the sector at least by 20% to around Rs 98,000 crore to make up for the shortfall in the last three years and slow progress on asset monetisation, he said.

Any additional spending, however, is expected to increase NHAI’s debt. The authority’s debt has increased threefold since FY17 to Rs 2.49 lakh crore as on March 31, 2020. The borrowings, according to ICRA, are expected to surpass Rs 3.5 lakh crore by FY2023 to fund the Bharatmala project.

FASTag Boosts Earnings

The NHAI started rolling out cashless toll payments through FASTag—an RFID payment card—towards the end of 2019 and start of 2020 to shorten queues at toll plazas and cut costs. FASTag is mandatory now.

FASTag contributes more than 75% of the total toll collection and has over 2.2 crore users with over 5 million transactions in a day, Sukhbir Singh Sandhu, chairman at NHAI, said in the newsletter.

After the rollout of FASTag, the authority said collection increased Rs 92 crore a day from Rs 70 crore earlier.

Also read: Toll Collection Through FASTag In December Rises To Rs 2,304 Crore

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