India’s highway-building programme is in crisis. This is partly due to its very ambitious scale, which means that public funds are not adequate to meet the programme’s demand for capital, given the swiftness with which roads need to be rolled out.
There are other reasons as well. The crisis is also caused by the government’s inability to design auctions that eliminate unrealistic bids and delays that, in some cases, are a direct outcome of tardy clearances and regulatory hassles.
The road sector’s problems have also arisen because the government’s private sector partners failed to take into account the effect a growth slowdown would have on their revenue, or were too ambitious in their forecasts.
Thanks to a combination of these factors, not even a single build-operate-transfer (BOT) project was awarded in the first six months of the ongoing financial year, indicating the degree to which the private sector has soured on road-building. Basically, nobody wants to touch it.
In October, the government set up a panel under the chairman of the Prime Minister’s Economic Advisory Council, C Rangarajan, to figure out if there was a way out of this conundrum.
The panel had some difficult decisions to take. In particular, many existing highway concessionaires wanted to defer the premiums that were due to the National Highways Authority of India, or NHAI, under the BOT system.
The premium, which can range from Rs 3 crore to Rs 680 crore (Rs 30 million to Rs 6.8 billion) a year, is to be paid out over 20 to 25 years, increasing by 5 per cent every year. The total premium due over the next few decades is Rs 1.5 lakh crore (Rs 1.5 trillion).
But the fact that revenues have not matched estimations means that many companies are grumbling about having to pay out.
by pravin sarode
EVERY POLITICAL PARTY MADE MONEY TO BUY VOTES BY DONATIONS THEY RECEICE FROM ROAD CONTRACTOR PERCENTAGE PAID BACK AFTER PAYMENT SAY 30/100
Why no private road builders
by Bodh Ramdeo
Safety, Productivity, Quality, Timeliness…
those are not part of the lexicon of this poverty-stricken land.
The photo of squatting women building road by hand with little pieces of wood says it all…apparently shoddy and substandard are the national standard.
As for life-safety…there’s no protective barriers to protect the workers from traffic whizzing by, nor even traffic cones or even signage to route drivers away from that lane they’re working in.
Of course, the workers were all wearing ‘hard-hats’ while shod in flip-flops or altogether barefooted…
If creating employment for the underclass is the priority, then it’s OK if projects takes 50 years to complete.
If creating desperately needed infrastructure like roads etc is the priority, then time is of the essence.
Trying to do both, simultaneously, solves neither of the two satisfactorily.
Is it any wonder that this is still such a primitive, underdeveloped land???
Is it any wonder that infra projects take decades upon decades to be completed, if ever????
top SPV system
by B Karthikeyan
The Special purpose vehicle system should be stopped at once. Also govt should compensate the private companies who have applied for bidding for road work in last 3 years – they are all suffering.
In my city …
by prakash sharma
60 % of the funds alloted for roads and other public infrastructure projects goes to the royal families. in the remaining funds. 20% goes to the contractor and other Government officials. Only about 20% is utilised. So how can u expect quality roads with such rampant corrupt practises???? and u say public funds r not enuff..?? boolsheet !
by aaftab kazi
wait for 2014 modi will solve all these problems