Bucking the trend in other infrastructure sectors which suffered on account of the pandemic, 2020-21 turned out to be a stellar year for the highway sector. A record 13,298 km of highways have been constructed in the economic year, as against about 10,240 km in FY20, which made for ~30% y-o-y development and a pace of 36.4 km/day. On the award front, 10,467 km of projects have been awarded, up ~17% more than 8,948 km in the preceding year. A host of business-friendly measures taken by the government are mentioned to be behind this overall performance, with analysts holding that continuation of measures to enhance liquidity and relaxation in norms for bidders could see building pace crossing the 40 km/day mark in the new fiscal.
The overall performance of the Nitin Gadkari-led highway ministry is specially commendable offered that no building activity was permitted in the initially 20 days of April 2020, owing to the Covid-induced lockdown. To enhance money flows for contractors in the pandemic-hit months, the ministry lowered the quantum of the overall performance assure and released the excess revenue. It also released all pending payments and nudged firms to accomplish mandated milestones and obtain payments speedily. These measures boosted the self-confidence of sector players, top to brisk activity, mentioned Jagannarayan Padmanabhan, director, CRISIL Infrastructure Advisory.
Icra’s Rajeshwar Burla says relief measures like a shift from milestone-based billing (usually ranging in between 45 and 75 days) to month-to-month billing and release of retention revenue or overall performance safety in proportion to the work currently executed, amongst other individuals, helped contractors immensely by minimizing the money conversion cycle. “Due to the improved cash conversion cycle for Ministry of Road Transport and Highways (MoRTH)/National Highways Authority of India (NHAI) projects, many road contractors made special arrangements to facilitate the return of labour, notwithstanding the high costs involved. As a result, execution witnessed a sharp improvement, with liquidity-boosting measures aiding it further,” Burla says.
Besides these initiatives, the robust project monitoring method the ministry has evolved more than current years and its proactive strategy to resolving troubles contributed to last year’s overall performance. Availability of land and significantly less website traffic on highways mainly because of the pandemic also helped speed up building levels.
Over the last seven years, the total length of India’s National Highways has gone up from 91,287 km (April 2014) to 1,37,625 km, (20 March, 2021), an raise of 50%, the road ministry has mentioned. Average annual project awards in the FY15-21 period witnessed development of 85% more than the FY10-14 period.
While MoRTH has not set any target so far for building and award of highway projects in the present fiscal, the speed of building is extensively anticipated to exceed 40 km/day. Making the highest-ever capital outlay of Rs 1.18 trn in the 2021-22 Budget, Finance Minister Nirmala Sitharaman had mentioned more than 13,000 km of roads, costing Rs 3.3 trn, had currently been awarded below the Rs 5.35-trn Bharatmala Pariyojana project, with 3,800 km of highways getting been constructed. By March 2022, an additional 8,500 km of projects would be awarded and an added 11,000 km of highways be completed, she had pointed out.
Speaking to FE lately, NHAI Chairman S S Sandhu mentioned the agency planned to award projects worth about Rs 2.25 lakh crore in the present fiscal, as against projects worth Rs 1.71 lakh crore in 2020-21. Exceeding the 4,500-km target, the NHAI awarded 141 projects totaling 4,788 km in length in 2020-21.