Bharatmala a big opportunity for investors, but goal ambitious: Icra

Land acquisition is seen to be the biggest hurdle to for Bharatmala project

There are ample opportunities for investors in the government's ambitious Bharatmala project and its success critically hinges on timely land acquisition and adequate funding, rating agency Icra said on Wednesday.

The Cabinet approved the Bharatmala Pariyojana Phase-I, along with other programmes in October 2017 involving around 83,000 km, including Bharatmala's 24,800 km of national highway development by 2021-22.

"The Bharatmala programme has the potential to change the entire landscape, if implemented as per the plan... The new approach is unlike the project-based approach adopted in the past (different stretches in different geographies), which led to inconsistent infrastructure development across corridors," Icra said in a statement.

Shubham Jain, Vice-President and Sector Head, Corporate Ratings, Icra, said the National Highway Development Programme (NHDP), the largest highways project ever undertaken in the country till date, had achieved a progress of 26,255 km in 17 years.

"The cumulative awards and execution for the last eight years by the Ministry of Road Transport and Highways (MoRTH) stood at 61,977 km and 43,307 km, respectively. Given the past track record, completing 83,000 km by FY2022 looks extremely ambitious," he said.

Land acquisition is seen to be the biggest hurdle to road development.

Fragmented land holdings, lack of clear land titles, dependence on local authorities, inadequate land acquisition plan at the time of preparing detailed project reports and lack of methodology for compensation are major difficulties faced during land acquisition, the agency said.

Icra added that in about 80 per cent of the delayed road projects, the reason for delay is attributable to unavailability of right of way, which is the responsibility of the awarding authority.

"Another major challenge for Bharatmala (unlike NHDP) is compliance to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR), which led to increase in compensation by four times the market value in rural areas and twice the market value in urban areas, thereby resulting in a steep increase in acquisition cost to upwards of Rs 2.50 crore per hectare currently (as against Rs 0.90 crore per hectare in FY2014)," it stated further.