The govt. has announced an outlay of Rs. 6.92 trillion for building an 83,677 km road network over the next five years.
The largest ever outlay for road construction comes in the backdrop of the) government implementing the goods and services tax (GST) which aims to create a common market by dismantling inter-state tariff barriers. A robust road infrastructure will help in that direction. The road construction push includes the Bharatmala Pariyojana with a Rs 5.35 trillion investment to construct 34,800km of roads. In addition, Rs1.57 trillion will be spent on the construction of 48,877km of roads by the state-run National Highway Authority of India (NHAI) and the ministry of road transport and highways. To expedite the Bharatmala projects, apart from ministry of road transport and highways and state-run firms—NHAI and National Highways and Infrastructure Development Corporation Ltd (NHIDCL)—even respective state public works departments (PWDs) will be roped in for timely execution. To fund the marquee Bharatmala scheme, Rs2.09 trillion will be raised as debt from the market, while Rs1.06 trillion in private investments is being targeted through public private partnerships. In addition, Rs2.19 trillion will be provided from Central Road Fund (CRF), Toll-Operate-Maintain-Transfer (TOT) projects and toll collections of NHAI.
The government is working on raising capital by monetizing the operational road assets of NHAI that have been built by public funding, a first in the country. The government expects a private investment potential of Rs34,000 crore from the monetization of these 82 operating highways under the TOT model.
This update is authored by Clasis Law, Clyde & Co's associated firm in India
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