Bharatmala could be the road to creating jobs
The real challenge for the project will be the Centre’s ability to mobilise finance and deal with land acquisition
The Union government announced its Bharatmala project last week. This is part of the Rs 7 lakh crore-plan — the largest ever outlay for a government road construction scheme — to build 83,677 km of highways across the country by March 2022. Bharatmala will replace the National Highways Development Project, which is expected to be completed this year, with only 10,000km of highway construction left under the scheme launched in 1998.
The project compliments the equally ambitious Sagarmala programme, which aims to promote port-led development by harnessing India’s long coastline, 14,500-km of potentially navigable waterways and strategic location on key international maritime trade routes. Under Sagarmala, the government has identified over 150 projects that will mobilise more than Rs 4 lakh crore investment. These projects have been identified across the areas of port modernisation and new port development, port connectivity enhancement, port-led industrial and coastal community development.
Given the multiplier effect that expenditure on infrastructure has on the economy of a country, the projects will help revive con- sumer demand and reduce trade and transaction costs of transporting goods across the country. They will also contribute substantially to growth and create jobs to help India reach a 10% growth trajectory by 2022. While Sagarmala is expected to create one crore new jobs, Bharatmala itself will create an estimated 100 million man-days of jobs during the construction period.
The real challenge for the Bharatmala project will be government’s ability to mobilise finance and deal with contentious issues such as land acquisition and environmental clearances. Out of the Rs 7 lakh crore for Bharatmala, only Rs 2.19 lakh crore will come from the central road fund and the rest from the market .
The government needs to be careful about maintaining fiscal discipline of both projects. It must take appropriate steps on the basis of the Vijay Kelkar committee’s recommendations on public–private partnership models to ensure participation of private players in these projects.
This is critical since the financing infrastructure in India is not in a good shape. The assets of both lending institutions and infrastructure companies are under stress. Though the decision to recapitalise banks will help the public sector units to invest in long-term projects, the government should also explore the bond market, insurance and pension funds from foreign markets for the Bharatmala project.