Big-ticket infrastructure projects in sight, all roads lead to PPPs

July 11, 2014

ENS Economic Bureau

Govt allocates Rs 37,880 cr for NHAI; sets a target of constructing 8,500 km of highways.

The road sector got a major boost on Thursday as the government announced it would invest Rs 37,880 crore for the National Highways Authority of India (NHAI) and set a target of constructing 8,500 km of highways in the current financial year.

In his budget speech, Finance Minister Arun Jaitley said steps would be taken to encourage the private sector to partner with the government in executing big-ticket infrastructure projects. As a key step, he said, an institution called 3P India would be set up with a corpus of Rs 500 crore to help execute public private partnership (PPP) projects. For project preparation, NHAI would set aside Rs 500 crore, he said.

Setting an ambitious target of constructing 8,500 km of highways this fiscal, Jaitley said of the Rs 37,880 crore to be invested for highways, Rs 3,000 crore would be spent in the Northeast alone. He announced initiation of work on select expressways in parallel to the development of industrial corridors.

Jaitley said India has emerged as the largest PPP market in the world with over 900 projects in various stages of development. PPPs have delivered some iconic infrastructure like airports, ports and highways, which are seen as models for development globally. But considering the weaknesses of the PPP framework and rigidities in contractual arrangements, there is a need to develop more nuanced and sophisticated models of contracting and develop quick dispute redressal mechanism.

Stating that the Pradhan Mantri Gram Sadak Yojana, which began under the tenure of NDA-1, “had a massive impact” in improving access for the rural population, Jaitley said, “It is time to reaffirm our commitment to a better and more energetic PMGSY under the dynamic leadership of Prime Minister Narendra Modi. I propose to provide a sum of Rs 14,389 crore.”

After a dismal show in 2012-13, the Union Road Transport Ministry had scaled down its projects award target by nearly half to 5,000 km 2013-14. It could award less than 2,000 km projects in 2013-14. In 2012-13, the ministry was barely able to award 15 per cent of the targeted 9,500 km of highways on account of a number of factors, including delay in clearances and equity crunch by developers.

“The road sector constitutes a very important artery of communication in the country. The sector had taken shape from 1998-2004 under NDA-I. The sector again needs huge amount of investment along with debottlenecking from maze of clearances,” Jaitley said.

Arguing that metro projects have helped in de-congesting cities, he said Rs 100 crore has been earmarked in the budget for metro projects in Lucknow and Ahmedabad.

A National Industrial Corridor Authority, to be headquartered in Pune, would be set up with a corpus of Rs 100 crore to coordinate the development of the industrial corridors, with smart cities linked to transport connectivity, he said.

Saying development of ports is critical to trade, he said 16 new port projects are proposed this year. He announced allocation of Rs 11,635 crore for development of outer harbour project in Tuticorin for phase I.

Jaitley announced a new scheme to develop airports through PPP and hiked allocation for the Civil Aviation sector by over 11.4 per cent to Rs 9,474 crore.



Share your comments here: