Safety first in road contracts

Penalty regime should be backed by rigorous project appraisal

The Ministry of Road Transport and Highways’ plan to penalise contractors in engineering, procurement and construction (EPC) for deficiencies in road construction leading to fatal accidents marks a significant drive towards enforcing greater accountability and safety in projects. Contractors will be given an opportunity to rectify the error within 15 days of the first accident, with the option for the government to step in to undertake remedial work at the contractor’s cost if the person does not comply within the deadline. If another accident occurs within a year of the first at the same spot or 500 metres from the original location, contractors will be charged ₹25 lakh for each fatality and ₹10 lakh for each grievous injury. Though this punitive framework appears unexceptionable in theory, it amounts to action taken after a tragedy occurs.

 The question is whether this move needs to be complemented by a more rigorous project appraisal and inspection regime within the relevant government agencies, to ensure that project design and engineering are optimum in the first place. In a country in which experienced contractors are known to display no mean talent in exploiting contractual weaknesses, zero tolerance should precede a repent-and-pay policy. India has the distinction of having the world’s third-largest road network but also shares with China global leadership in road fatalities. In 2025, India recorded over 183,000 fatalities from over 500,000 accidents, averaging 21 deaths every hour, according to the government data. Poor road design is not the only cause of these. Rash driving and rule breaking too are major contributors, but bad road design does constitute a significant threat. Former Tata Sons chairman Cyrus Mistry’s death in 2022 was partly the result of an engineering flaw on the highway on which he was travelling (though the driver, too, was speeding).

 Still, the problem is clearly serious enough for the Road Transport Minister Nitin Gadkari to flag the issue. Speaking at a road-safety event in August, he identified poorly designed accident-prone stretches or black spots as a major cause of road deaths. He spoke of spending a steep ₹40,000 crore to identify the most vulnerable spots in 100 districts to fix the problem. Though this exercise is good, the question is why it should have been needed. The government uses a mix of models for road construction projects — EPC; the hybrid annuity model, or HAM, part-financed by the government; and the build-operate-transfer or BOT annuity model, in which the government pays the contractor fixed semi-annual amounts.

 Typically, payments for road projects are linked to pre-agreed milestones and a portion of the payment is held back for a defect-liability period, which can vary from one to four years. This implies that some level of quality control is baked into contracts. Perhaps the question the government should also be asking is why such a high level of fatality-causing deficiencies happens when a third-party independent engineer or certifier has to sign off on the quality of a road before payment is released. National highways account for over a third of road fatalities. With large highway projects under construction, the need for significantly upgrading the monitoring of engineering and construction quality has become critical. The lives of thousands of Indians depend on it.