INFRATALK MEGA MISSION
On October 24, 2017, the nation was presented with a “historic road building programme” called Bharatmala.
It envisages 83,677 km of construction of new roads over the next five years at an investment of ~6.90 lakh crore. The plan encompasses connecting economically important nodes, feeder routes, border roads, coastal roads, port connectivity and greenfield expressways. It is heartening to see Indian public systems morph from a project to a programmatic approach. Clearly, the immediate beneficiaries are going to be the road construction companies and construction equipment manufacturers. The stock markets have already given a thumbsup to these companies. ( see box)
It is clear that the success of Bharatmala would rest substantively on mobilising a large chunk of capital from private sources as well as garnering robust and enthusiastic participation by private construction companies. Its implementation now requires the rate to enhance to 46 km/day from the 25-28 km/day being reported right now, even crossing Road Minister Nitin Gadkari’s inspirational target of 41 km/day. There is thus a special need to rebuild trust, confidence and empathy between public and private spheres. These bonds have unravelled over time and the recent snafu of the National Highways Authority of India (NHAI) getting set to debar a clutch of large construction companies from participating in future tenders have further jangled frayed nerves. The construction sector does need a soothing and helping hand, and many suggestions have been made over time on contract administration and dispute resolution processes. The oft-perceived master-slave relationship needs to be replaced with a mutually respectful partnership.
Without officially being positioned as such, Bharatmala is being seen to be a kind of “mini-stimulus”. It is expected to create 14.2 crore mandays worth of new jobs across the next five years as well as rejuvenate the economy with all its multiplier effects. So, how large is this mini-stimulus?
A recent CRISIL report postulates that India will be spending ~50 lakh crore on infrastructure development in the next five years. Had the 13th FiveYear Plan existed, it is believed that it would have targeted a minimum of ~75 lakh crore for the period of 2017-2022, a 14 per cent increase over the ~56 lakh crore targeted in the 12th Plan. Let us assume a mid-point target of ~63 lakh crore for the next five years. This ~7 lakh crore then turns out to be 11 per cent of the total expected infra spends, which in a way is not all that dramatic. It has to be conceded, though, that the share of roads in total infra spends is rising, thanks in no small measure to a dynamic minister leading the charge.
The outlay also raises the road: rail mix issue, and whether India is going the US way in promoting roads at the cost of rail. Well, that does not appear to be the case. In the Five-Year Perspective Funding Plan announced by Suresh Sources Market borrowings Private capital (PPP) Central road fund/ toll operation transfer schemes and owned tolls Other funding available with NHAI/ministry of road transport and highways Budgetary support Total (Figures in ~lakh crore) Amount Prabhu, when he was the railway minister, the total capex outlay for the railways was presented at ~8.56 lakh crore for five years or rather ~1.71 lakh crore per annum. The Bharatmala outlay, at ~6.90 lakh crore for five years, is ~1.38 lakh crore per annum. Add to this rural and other roads that are not included and we come to the rather interesting conclusion that India is proposing to spend the same on both its road and rail networks. What this will do to the freight and passenger mix across road and rail is best left to be answered through a separate investigation.
The other question that crops up is whether India has sufficient institutional capacity to implement such a large programme. Remember the original Golden Quadrilateral programme announced by Prime Minister Atal Bihari Vajpayee was all of 15,000 km. Luckily, in the roads sector India has a clutch of public institutions to handle it. This comprises the NHAI, the National Highways and Infrastructure Development Corporation Limited, the ministry of road transport and highways itself, along with — at the states level — the state road corporations and associated public works departments. This is substantive statal capacity, and is matched with private sector construction companies who have time and again demonstrated that they can rise to the occasion.
The inclusion in Bharatmala of 800 km of greenfield expressways deserves attention. Historically, the strategy has been to expand existing carriageways in a stage-wise manner to bypass the challenges of fresh land acquisition. The timely 36-month implementation of the greenfield Lucknow-Agra Expressway by a state government has shaken the central establishment vis-à-vis its own delays in the traditional approach.
The biggest concern to be addressed is safety. As many as 407 people die in road accidents in India every day. It is unthinkable to undertake such a massive roads programme without a parallel and urgent rectification of roads safety. The clutch of measures here relate to creating an independent road safety agency, updating and unifying relevant codes, fixing black spots, teaching and certifying safe driving, and using modern technology for highway safety.
In conclusion, two quick points are in order.
One, the concept of a “betterment levy”, as proposed in the new Metro Rail Policy, is worth bringing into the roads sector. Why allow hefty increases in land prices due to such road development accrue only to real estate speculators?
Two, such large chunks of public expenditure need to be accompanied by a clear and stated asset recycling policy, along the lines of the toll-operatetransfer programme that is about to be implemented.
Bharat’s road to Malas can follow. vikas is in place.