'Subsidy only for viable road projects'

The road sector requires a major dose of investment, despite the rapid increase in expenditure on upgrading roads during the past few years.

"Even if the National Highway Authority of India (NHAI) doubles its capital expenditure, it will account for only 0.5 per cent of the gross domestic product," said Ashok Lahiri, chief economic adviser to the finance ministry, at a conference on roads and highways here today.

Over 170,000 villages needed to be connected with roads, which would involve an investment of Rs 130,000 crore, apart from the other ongoing national highways programmes, he said.

To ensure that viable projects were taken up under the "build, operate and transfer" contracts, Lahiri said subsidy should be given to only those projects where traffic projections promised enough returns. Selection of such projects should not be governed by political considerations, he added.

He said corridor management would help in the de-congestion of roads. "The traffic growth rate at various stretches has been above expectations. In addition to the widening of roads, efficient corridor management could also be used to handle growing volumes," he said.

The government was also looking at various alternatives to fund the road projects, he said. "Not all roads can be financed through toll revenues. In such cases, resources generated through fuel cess are being used," he added. He pointed out that fuel cess was now becoming an accepted means of raising resources for road construction.

Speaking at the conference, Larsen & Toubro Vice-President (ECC division) K Venkatesh said there was a desperate need for standardisation of operation and maintenance practices, and tolling equipment.

He added that the government should make efforts to accelerate the construction process. The state support agreement by the states through which the proposed road runs, should be signed on the day the project agreement was signed, and a regulatory mechanism should be put in place to take care of various disputes and delays, he added.