After the awarding of new highway projects halved in 2023-24, the Ministry of Road Transport and Highways (MoRTH) has conveyed to the Union Cabinet the lag in approving the revised proposal of its flagship highway development programme, Bharatmala Phase-1, whose estimated cost has doubled to more than Rs 10 trillion.
In its monthly report to the Cabinet, the ministry said awarding national highway projects between April and October had been 2,595 km as against 5,007 km during the same period last year — a dip of 48 per cent.
“If the target for award has to be met for this year, decision on the proposal for approval of the revised (Bharatmala) Phase-l or alternate programme needs to be taken expeditiously. Shortfall in award this year will reflect in the progress of construction in the FY (financial year) 2024-25,” the ministry has informed the cabinet.
The Bharatmala Pariyojana Phase-1, approved in 2017 and expected to be delayed by at least five years due to the Covid-19 impact and land acquisition woes, has undergone a massive cost revision. Despite a parliamentary standing committee noting the escalation as early as March 2022, no approval has been granted yet to the revised proposals.
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Experts noted these approvals would be needed for the ministry to be able to infuse funds for awarding new projects.
Meanwhile, the Centre has been working on an alternative programme for highway development. This plan may subsume future phases of the Bharatmala Pariyojana, according to reports.
Meanwhile, the construction of highways has been able to overcome some of the early shocks in the financial year, where project milestones had been affected due to unseasonal rain.
Between April and October, MoRTH, through its executing agencies, constructed national highways of 4,474 km, which is 10 per cent higher as against the same period last year. However, seven months into the financial year, this is a little higher than a third of its yearly target.
Constructing national highways usually scales up rapidly in the last quarter of a financial year owing to favourable weather conditions and the need to meet targets.
According to experts, while the construction of highway projects remains resilient, awarding new contracts typically dips in the financial year before the Lok Sabha elections (see chart).
A Mumbai-based senior analyst said the slowdown was unlikely to have a major effect on the sector, as most contractors’ order books have doubled or tripled in size due to the recent capital expenditure push by the Centre.
Most players expect awarding to pick up again in 2024-25.