Mint Primer: Why building of highways in India is slowing down
rise in raw material and land prices—under Bharatmala Pariyojana by the Union cabinet is a big reason. There have also been delays in execution of projects awarded under the hybrid annuity model that makes up more than half the projects awarded from FY21 to FY24. A third of these are facing delays of up to six months.
The accelerated pace of construction has largely been on the back of government support as the private sector has tended to stay away so far. Budgetary allocation has gone up from ₹32,000 crore in FY15 to ₹71,000 crore in FY19 and ₹1.41 trillion in FY23. Last fiscal year, this went up to ₹1.67 trillion.
In the current year it’s been hiked marginally to ₹1.68 trillion. Yet, a significant part of this goes towards repaying the debts of the National Highway Authority of India, which builds more than half the highways. NHAI is tasked with building most of the wider highways and to do that it has to borrow heavily from the market.
Its debt has gone up to ₹3.5 trillion. Repayment will peak by FY28 before tapering. NHAI will only be debt-free by 2040.
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