India's National Highway Expansion Faces Slowdown Amid Declining Project Awards and Stricter Land Acquisition Norms

The Indian government is staring at a decline in the construction and widening of national highways in the next two years as there has been a slowdown in the awarding of new projects in 2023-24 and the current financial year, according to a report by The Times of India.

Still, the road transport ministry remains optimistic about crossing its target of constructing 10,400 km of national highways this fiscal year.

Since highway construction takes two years from the date contracts are awarded, the ministry anticipates reaching 11,000 km by this fiscal end and is almost at 7,000 km in distance covered.

Historically, construction speeds up in the February-March period. However, the progress is not envisaged to be sustained beyond this year.

According to a source, "Maintaining this pace for the next two years will be difficult as the projects under implementation have reduced with bidding out of less number of projects".

So far during the third week of January, the newly awarded highway projects stood at around 4,100 km, up from the previous year.

Project awards have followed an uneven pattern. From 10,964 km in 2020-21, it rose to 12,731 km in 2021-22 and then dropped marginally to 12,379 km in 2022-23.

Still, the momentum has clearly lost ground following the government's directive to put an end to fresh approvals under the 'Bharatmala' programme and not having anything in place for new highway development initiatives.

To make things even more challenging, an inter-ministerial committee has recommended the ministry to approve project bids only when it gets 80-90 per cent of the required land and obtains statutory environmental and forest clearances.

While this move is expected to reduce delays, cost overruns, and legal disputes, it could also impact the speed of awarding new projects. For projects under the hybrid annuity model (HAM), where private players contribute 60 per cent of the investment, highway-building agencies must acquire 80 per cent of the land before approval.

Meanwhile, all those projects of engineering, procurement, and construction are fully government funded, hence requires 90 percent land acquisition to start the job.