Investment in roads needs to triple: Study

India needs to invest Rs 2,10,350 crore in the roads sector, which is thrice the planned amount, to achieve 8 per cent growth in GDP by 2007, according to a study conducted by Four-S Services.

"Analysis shows that if India is to achieve 8 per cent target GDP growth for the Tenth Plan period, the proportion of investment in roads to the total investment has to increase by 17.25 per cent," the study said.

Nearly 20 per cent of India's national highway continued to be single-laned. Further, only 20 per cent of paved roads were in good condition compared to 70 per cent in Korea and more than 85 per cent in the US, it added.

Highways and expressways accounted for a mere 1.77 per cent of India's total geographical spread. In contrast, the share of highways and expressways was estimated at 14.09 per cent in China. The study pointed out that there was ample scope of improvement with greater private participation through domestic and foreign investment.

Building a case for earmarking more projects for the private sector, the report said that the private projects in the National Highway Development Programme (NHDP), witnessed a 3.5 per cent slippage in time targets as against a 65 per cent slippage in projects funded by the National Highway Development Authority of India (NHAI).

The study has identified long- term financing, lack of adequate pre-qualification in the bidding process and multiple agencies handling planning, implementation and regulation in the sector, as problem areas. It has seen financing as a major problem faced by the roads sector.

Innovative avenues of resource mobilisation like initial public offerings and asset securitisation need to be explored. Long-term sources of funding like pension and insurance funds should be tapped and commercial banks should increase their tenure for loan to 15-30 years from the present 5-7 years, as was the practice in developed countries like the US and Britain, the report said.

It has recommended setting up of an overall regulatory body having full responsibility and authority for planning, completely divorced from project development.

"The system of multiple agencies means obtaining clearances from NHAI, Public Works Department, Roads and Highways Department, Planning Commission and Ministry of External Affairs that ideally should be handled by one agency only," the study said.

Tighter bidding process to avoid awarding projects to those who do not have the capacity to execute high quality projects has been suggested in addition to a three-stage model followed by the World Bank.

There was also a need for integrated contracts with long concession periods which combined construction with operation and maintenance, to improve quality of maintenance of roads, the report said.