Highway expansion accelerating Indian growth story
New Delhi: Highways are integral to a country’s growth connection people and transporting goods and raw materials. A rapid expansion and makeover of Indian road network has ensured that India is steadily on track to reach standards at par with the best in the world.
Nitin Gadkari, the Minister for Road Transport and Highways says that by 2024, India’s road infrastructure will be equivalent to US standards. This might not be an exaggeration considering the sheer number of projects that have been undertaken, and are in the pipeline.
The development and maintenance of road infrastructure is a key government priority, with the sector having received strong budgetary support over the years. In the Indian Budget 2022-2023, USD 26 billion was allocated to the Ministry.
With the second-largest and ever-growing road network in the world, covering over 637 million kms, India is taking charge of its own growth story.
Indian roads and highways are used to transport over 60 percent of cargo and 85 percent of passenger traffic, meaning the pace of movement of people as well as goods and services, is handled by this lifeline system. Its development is vital and accounts for a major portion of the Indian Budget in investment.
With the government actively encouraging private-sector participation, as well as permitting 100 percent Foreign Direct Investment in road infrastructure projects, many private and foreign players have joined hands. The Public-Private Partnership (PPP) model has become a great success in this sector, with foreign companies striking deals with Indian players to capitalise on the sector’s growth potentials.
The market for roads and highways in India is projected to post a CAGR (compound annual growth rate) of over 36 percent during 2016 – 2025, driven by expansive initiatives by the Indian Government to improve transport infrastructure.
Tthe Ministry has worked towards the standardisation of various processes related to PPP and public-funded projects with the creation of a clear policy framework for bidding and tolls.
In 2017, an electronic toll collection system, FASTag, was introduced to enable the payment of toll taxes electronically. In addition, under the Road and Transport Mission Mode Project, regional transport offices (RTOs) are being computerised all over India to create a consolidated transportation database.
The Ministry also plans to commence 131 new National Highway projects at an estimated cost of USD 10.2 billion in the North Eastern states in the next 3 years, under the National Infrastructure Pipeline.
It also plans to link unconnected regions across the country under the Pradhan Mantri Gram Sadak Yojana as part of poverty alleviation strategy.
The Bharatmala Pariyojana is the country’s largest-ever and most ambitious highways development programme. It aims to bridge critical infrastructure gaps in the country’s roadways system and bring about multi-nodal integration. This includes building and maintaining a sound network of economic corridors, inter-corridor and feeder roads, border connectivity roads, coastal and port connectivity roads and expressways. The umbrella programme covers 16 states, with special emphasis accorded to border and rural areas, including tribal and backward regions.
The project will interconnect 550 district headquarters through a minimum 4-lane highway and move 80% freight traffic to National Highways by interconnecting 24 logistics parks, 66 inter-corridors (8,000 km long), 116 feeder routes (7,500 km long) and 7 multi-modal waterway ports. The total investment for 83,677 km of new highways is expected to be around USD 13 trillion, making it the single largest outlay for a national road construction scheme as of March 2022.
A 2022 report by the Bank of America Securities India states that India is on course to build more national highways in the decade ending 2025 than have been built cumulatively between 1950 and 2015. This translates to a 133% growth in highway construction by 2025, which is higher than that registered by any other country in the world in recent memory.