At the end of ten-years of the UPA rule, road development in the country had hit its pit in terms of investment and performance in the last financial year 2013-14. With a host of private players withdrawing interest from the sector, last year saw a slide of over 60 per cent in private investment since 2011-12.
Statistics with the National Highways Authority of India show that private investment in highway projects has slipped to barely 30 per cent in 2013-14 of what it was in 2011-12, its all time high.In the last financial year, projects for 1,116 km were awarded, while construction was done over 1,661 km, barely about 50 per cent of the average in the last ten years. “Many private developers who put in their money in the sector in 2009-10, backtracked as their projections were no longer viable. Several projects eventually faced financial issues and required restructuring,” said an official in the Ministry of roads, transport and highways.
“In 2011-12 also the sector saw a steady growth due to aggressive bidding. Cumulatively, this has led to the current decline as the project costs became ungainly due to slow processes of mandatory environmental clearances,” he said. The share of the private sector in total expenditure in the highways sector has increased over the past decade from 18 per cent in 2004-05 to as much as 61 per cent in 2011-12 as project awarding was highest at 6,644 km. “This was very short term, as in 2012-13 although construction peaked at 2,844 km but awarding of new projects saw a sharp downturn as private sector started to back off from taking on new projects,” said the official.
Statistics with the ministry shows that in the last decade alone, over 27,000 km have been awarded and over 18,800 km have been built while private sector spend on highway projects has reached `1,06,218 crore.“last year, has been very bad as private bidding was very scarce. To hasten processes and to help private players, the government announced a slew of measures, which included easing the process of environment and forest clearances, lending norms for road projects were also made easy. The important decision of deferral of premium payments was also taken,”said the official.
“The Ministry also awarded several cash-contract models to keep things moving in the short term but actual recovery could take a while,” he said.According to the Government, the actual recovery in the road sector may extend anywhere between a two to three year period.