Gadkari Discovers A Smart Way To Beat High Land Costs For Building Highways

Smart ministers, smart staff and smart execution make it possible to beat dumb laws like the United Progressive Alliance (UPA)-era Land Acquisition Act, which mandates payment of four times market value for land compulsorily acquired for important road and other projects.

Due to this act, there was a real danger that infrastructure can become unviable, with one report pointing out that land acquisition costs have soared from 9 per cent of total project costs in 2009 to 37-55 per cent in some new road projects now underway.

How then has Road Transport Minister Nitin Gadkari managed to build close to 10,000 km of national highways in 2017-18, at a rate of nearly 28 km per day, two-and-a- half times faster than in the last year of the UPA?

One obvious reason is that the ministry is raising money by putting already operational national highway projects on the block. The money raised from these bids will be used to build new highways at higher cost. Some 75 highway projects that are already generating toll revenues are to be auctioned on a TOT basis – toll, operate and transfer.

Two, smarter alignments are being used to bring down land acquisition costs. The received wisdom is that when traffic grows, you should widen the existing road network to handle more traffic. The ministry has found that if you change alignments to connect the same two points with roads that run along another path, you can not only buy land cheaper, but also ensure faster traffic for slightly longer distances.

For example, the ministry is said to be seeking a new alignment for the Delhi-Jaipur Expressway which will lower land acquisition costs dramatically from the previously estimated Rs 6.43 crore per hectare. An Economic Times news report today (4 April) quotes Gadkari as saying that a new Mumbai-Delhi Expressway will be built with a new road alignment so as to minimise costs.

In 2017-18, the National Highways Authority of India built 9,830 km of highways at Rs 1.2 lakh crore – which gives an average of Rs 12.2 crore per km, including land, financing, administrative and construction costs.

When alignments are changed to fund new parallel highways, not only will costs fall, construction will not delay traffic on the old roads.

A bonus: new alignments mean the benefits of land acquisition will go to a new group of land owners and farmers, and not the same people who own land along the old highways. This is one way of creating new wealth in rural areas, where landowners in new underdeveloped areas benefit from changed road alignments. Unviable farming now has another exit option.

Smart.