YEAR IN REVIEW - ROADS. A bumpy ride with steep targets

The Union Minister for Road Transport and Highways, Nitin Gadkari, had announced a target highway construction pace of 41 km/day by May 27, 2017.

The steep target was meant to virtually double the rate at which roads were being built. But numbers till December do not add up or come close to the target.

Gadkari recently said he hoped to achieve a target of 30-32km/day for highway construction by the end of fiscal 2017, easily 10 km/day below his own target. Industry watchers claim the current rate of road construction stands at 20km/day or below, reflecting that there is a disconnect between the ambitions and achievements of the government.

In April, Gadkari had projected a target of awarding 25,000 km of national highways in fiscal 2017 (2.5 times the target of the previous fiscal). Of the 25,000 km, the marquee, the National Highways Authority of India, was to award 15,000 km. But according to data sourced from the NHAI website, the Authority has awarded only 2,147 km of projects under the National Highway Development Project till November this financial year; which is well behind its targets.

According to a Roads Ministry statement, the total length of highway projects awarded till November is 5,688 km — only marginally higher than the 5,331 km achieved till November last year.

Analysts go a step ahead and expect that the previous year’s awards of 10,000 km would probably be repeated for the full-year fiscal 2017, too, going by the pace of projects being awarded in the first half of 2017.

The real catch here is project completion for the full year, — NHAI’s construction target is 8,000 km, while for the Ministry and the National Highways and Infrastructure Development Corporation, it is 7,000 km. According to the Roads Ministry’s official statement, the total completion of all highway projects till November stands at 4,021 km vs 3,480 km last year. At the current pace, there is a shortfall of at least 10,979 km from the target the country needs to meet within the next four months.

But, all is not dull for the roads in the country. The ministry’s focus this year has largely been on promoting road safety and digitising records.

It had allocated ₹1,100 crore for fiscal 2016 and 2017 for safety. For FY2017, ₹600 crore was earmarked for rectification of black spots, installation of crash barriers in hilly areas, and execution of road safety audits and other road safety works.

Notable under the digitisation push is the scheme to establish automated centres to check vehicle fitness. An automated centre is currently operational at Nashik and more will likely be opened in Delhi, Haryana, Karnataka and Madhya Pradesh by January, 2017, the ministrt said in a statement.

There was also a drive to digitise toll collection at National Highways, which saw an unprecedented jolt from the demonetisation of high-value currency notes. According to the government’s figures, 3,133 FASTags — electronic toll collection devices — were sold in May, 2016; the number went upto 1,78,266 by December 22. The fee collected from FASTags was just ₹71 lakh in May 2016; this rose exponentially to ₹47.02 crore by December 22.

But the digitisation agenda won’t push the bus for long and budgetary weightlifting will be required to boost interest in road building. According to industry players, if the government really wants to give road building an infrastructure push, they must continue benefits under Section 80-IA of the Income Tax Act beyond March 31, 2017. The provision enables a 10-year tax holiday for infrastructure projects.

Players also bat for reinstating section 10(23G) of the Income Tax Act under BOT (Build-Operate-Transfer) annuity projects. The section, rolled back in 2006 by the then Finance Minister P Chidambaram, enabled a tax-exempt status for companies engaged in infrastructure projects by way of debt or equity.

In the words of an industry player, unless there is a preferential tweaking in Income Tax rates, the sector won’t attract many players.