Road sector is growth multiplier but currently gasping for breath: S C Garg

Excessive compensation payments for land acquired for roads, rise in construction and compensation claims and building of roads where traffic is not available, has led to national highways roads becoming a severely financial unviable proposition, former power secretary Subhash Chandra Garg said.

Expansion of road network at all levels- national, state, districts and villages, is vital for national growth as well as for all round well-being of all people.

Road infrastructure investment has the biggest spin-offs in terms of boosting economic activity and social advancement, Garg said, who also served as Finance Secretary before his three-month long stint at the Ministry of Power.

“NHAI has got totally logjammed on account of unplanned and highly excessive expansion of roads declared as “National Highways” and “National Highways in principle”. Aggregate strength of these two types of national highways exceeds over 1.9 lakh kilometres,” Garg said.

With NHAI being mandated to pay several times the cost of land and its’ construction cost also shooting up, roads infrastructure have become financially non-viable leading to private investors and construction companies completely withdrawing from the green-field road projects.

Model has fully moved to Hybrid Annuity and EPC mode, where all the investment is made by the Government. This is unsustainable and has to be reformed. NHAI should transform itself into a road assets management company.

About 50000-60000 kilometers of NHAI approved and in principle national highways would need to be junked and a National Highways Grid blueprint prepared and sanctioned for all the roads that actually need to be taken up as National Highways until 2030.

NHAI must recognize road stretch or connected stretches of a reasonable size as a project and create a special purpose vehicle for constructing and managing it.

This would allow NHAI to upfront know the financial sustainability/ unsustainability of each project.
NHAI should thereafter take a conscious decision for every financially unsustainable project about how to meet the gap, if the project is to be taken up.

If the Government were to fund the viability gap, it should be done upfront. Once the project is structured as a financially viable project, it should be bid out on BOT basis.