India’s government have pledged to spend US$108 billion on building 83,677 kilometres (km) of roads in the next five years in order to kickstart the country’s economy
India’s government have pledged to spend US$108 billion on building 83,677 kilometres (km) of roads in the next five years in order to kickstart the country’s economy.
Its plans include construction of a 34,800km highway network connecting India’s western and eastern borders, and another 48,877km of roads built by the National Highway Authority of India and the Ministry of Road Transport and Highways.
It will be the country’s largest ever expenditure on road construction, adding to the 3.3 million km of existing roads, 96,260km of which are national highways.
Prime Minister Modi promised 41km of road a day would be constructed when he came into power, but only 25km a day has been constructed so far.
An estimated 16,700km of roads would need to be built per year over the next five years to meet the government’s 83,677km target.
A lack of private investment has contributed to such slow expansion, despite the government attempting various financing models.
New financing models include an EPC model (engineering, procurement, and construction), where the government funds road-building carried out by private developers, and a new hybrid annuity model where projects costs are shared between the government and private sector in a 40:60 ratio.
India had the world’s fastest growing economy until earlier in 2017, when the government demonetised two of India’s high-value currencies and introduced a new tax regime.
Public consumption and private investment shrunk, whilst industrial and agricultural sector growth faltered.
By increasing the size and efficacy of India’s road network, its government hopes to boost the infrastructural development and productivity of the country’s economy.
Vinayak Chatterjee, Chairman at Gurugram-based infrastructure services company, Feedback Infra, said: “The road sector has one of the highest economic and employment multiples in the country.
“With most of these projects likely to be undertaken by EPC and hybrid annuity, and the involvement of numerous agencies such as the national highways authority and state road agencies, it is possible to achieve the target of 83,000km in the next five years.”
