Govt may achieve FY'17 road awarding target: Citigroup

There is likely to be a substantial Y-o-Y increase in ordering and construction activity in this financial year

The government has increased the target for awarding projects by 2.5 times to 25,000 kilometres (km) for the ongoing fiscal, and though it is difficult, there are chances that these targets might be achieved, says a Citigroup report.

According to the global financial services major, the road sector in India is already seeing very substantial improvement in ordering and construction and this trend is likely to continue in the current fiscal as well.

On top of a high level of activity in fiscal year 2016, the targets for this fiscal year translate into building over 40 km of highways a day.

This target is "almost difficult to believe based on the track record before May 2014", Citigroup said in a research note.

"Recent performance in terms of award and construction has been extremely encouraging and a lot of ground work seems to have already been done. This raises the chance that FY17 targets may be achieved," it added.

According to the report, even if absolute headline targets are missed by some margin, there is likely to be a substantial year-on-year increase in ordering and construction activity in this financial year.

Of the total length of National Highways targeted for award, 15,000 km would fall under the target of National Highways Authority of India and 10,000 km under the target of the Road Ministry and National Highways and Infrastructure Development Corporation.

The speeding up of road projects has been made possible due to several policy interventions which include the Ministry being empowered to decide mode of delivery, increased threshold for project approval, enhanced inter-ministerial coordination, exit policy and promoting innovative project implementation models like hybrid annuity model.