Government Initiatives on Roads and Highways

India has second largest road networks in the world, spanning a total of 5.5 million kilometres (kms).
The private sector has emerged as a key player in the development of road infrastructure in India.
Increased industrial activities, along with increasing number of two and four wheelers have supported the
growth in the road transport infrastructure projects. The government’s policy to increase private sector
participation has proved to be a boon for the infrastructure industry with many private players entering
the business through the public-private partnership (PPP) model.
With the Government permitting 100 per cent foreign direct investment (FDI) in the road sector, several
foreign companies have formed partnerships with Indian players to capitalise on the sector's growth.
Cumulative FDI in construction development since April 2000 stood at US$ 25.12 billion as of June 2019.
MAIF 2 became the first largest foreign investment in Indian roads sector under TOT mode worth Rs
9,681.5 crore (US$ 1.50 billion). As of November 2018, total length of projects awarded under Bharatmala
Pariyojana (including residual NHDP works) was 6,460 kms for a total cost of Rs 152,000 crore (US$ 21.07
billion). The Government launched the Bharatmala Pariyojana, which aims to build 66,100 km of economic
corridors, border and coastal roads, and expressways to boost the highway network. It is envisaged that
the programme will provide 4-lane connectivity to 550 districts, increase the vehicular speed by 20-25%
and reduce the supply chain costs by 5-6%. The first phase of the programme will bring in $ 82 bn
investments by 2022 for the development of 34,800 km of highways. The total amount of investments are
estimated to reach Rs 158,000 crore (US$ 22.61 billion) in FY19. The government’s move to cut GST rates
on construction equipment from 28 per cent to 18 per cent is supposed to give boost to the industry.
The Ministry of Road Transport and Highways estimated the total expenditure of Rs 83,016 crore (US$
11.87 billion) for 2019-20. Transfer to National Investment Fund (NIF) is estimated at Rs 6,070 crore (US$
868.51 million) for 2019-20.The government plans to invest $ 22.4 bn towards road infrastructure in the
North-East region of India during 2018-2020.

The market for roads and highways is projected to exhibit a CAGR of 36.16% during 2016-2025, on account
of growing government initiatives to improve transportation infrastructure in the country. Almost half
(742) of the 1,531 PPP projects awarded in India until March 2018 were related to roads.
The highways sector in India has been at the forefront of performance and innovation. The government
has successfully rolled out over 60 projects worth over $ 10 bn based on the Hybrid Annuity Model (HAM).
HAM has balanced risk appropriately between private and public partners and boosted PPP activity in the
sector.
Asset recycling, through the toll-operate-transfer (ToT) model has been taken up by the National Highways
Authority of India (NHAI) for 100 highways. The first bundle of 9 highways with an aggregate length of
about 680 km was monetized successfully for an investment of $ 1.45bn.
The Ministry of Road Transport and Highways has fixed a target for construction of 12,000 km national
highways in FY20. The length of national highways constructed reached 1,31,326 kms. The Government of
India aims to construct 65,000 km of national highways at the cost of Rs 5.35 lakh crore (US$ 741.51 billion)
by 2022. In the month of December 2018, the Ministry of Road Transport and Highways (MoRTH) touched
a record 31.87 kilometre per day average of national highway construction. In the coming years, NHAI’s
increased delegation autonomy along with Bharatmala Pariyojana initiative is expected to enable growth in
awarding momentum. NHs under the Bharatmala Pariyojana programme which aims to optimise the
productivity of freight and passenger movement by filling the critical infrastructure gaps also sight to
increase the number of districts with national highway linkages from 300 to 550. The Ministry has allocated
Rs 3,150 crore (US$ 450.71 million) for maintenance of roads and highways in FY20, also allocated Rs 280
crore (US$ 40 million) towards road transport and safety. The Government of India has set a target to
complete one road projects every two days as a part of 100-day plan.

As per Union Budget 2019-20, Pradhan Mantri Gram Sadak Yojana (PMGSY) has brought many socio-
economic gains in the rural areas. Under the Union Budget 2019-20, the Government of India allocated Rs
19,000 crore (US$ 2.63 billion) for the Pradhan Mantri Gram Sadak Yojana (PMGSY). As pe Union Budget
2019-20, 30,000 kms of PMGSY roads have been built using Green Technology, Waste Plastic and Cold Mix
Technology, thereby reducing carbon footprint. PMGSY-III is envisaged to upgrade 1,25,000 kms of road
length over the next five years, with an estimated cost of Rs 80,250 crore (US$ 11.48 billion).
As per the Union Budget 2019-20, Government proposed to permit investments made by FIIs/FPIs in debt
securities issued by Infrastructure Debt Fund – Non-Bank Finance Companies (IDF-NBFCs) to be
transferred/sold to any domestic investor within the specified lock-in period.
 References
1. www.ibef.org
2. www.investindia.gov.in
3. www.makeinindia.com
4. www.crisil.com