The high road to prosperity: India shows the world what it takes to implement a massive highway development programme

By Vinayak Chatterjee

No review of the National Highway Development Program (NHDP) is possible without a genuflection to Atal Bihari Vajpayee’s intuitive push for this. On October 24, 1998, PM Vajpayee, addressing a leading chamber of commerce, suddenly unleashed on the nation his vision of a massive North-South, East-West Roads Programme.

Apparently, only he and his speechwriter knew about the announcement! A degree of subtle ‘damage control’ was undertaken behind the scenes to recast Vajpayee’s original vision of a North-South and East-West Cross into the Golden Quadrilateral as the Phase I of the NHDP while the original “cross” became NHDP II. This brought in the prioritisation of the high-traffic corridors of the Quadrilateral over the lesser load-carrying Cross.

Vajpayee laid the foundation stone of NHDP on January 6, 1999. A specialised implementation organisation was already in place, with the National Highways Authority of India (NHAI) constituted by an Act of Parliament in 1988. Thus was born India’s historic highway development programme. The years after saw a phase of additions of individual stretches (NHDPs III-VI). This was followed by the Bharatmala Pariyojana in 2017, which heralded an integrative corridor-based approach to connect economic nodes.

Over the years, the pace of highway construction kept increasing. It is to the credit of the NDA government, that even with two debilitating Covid years and periods of economic, banking and PPP challenges; it has been able to almost triple the pace in 2020-2022, compared to the last five years of the UPA regime. In fact, the energy and enthusiasm to reach higher levels is palpable in the system, with roads & highways minister Nitin Gadkari announcing a target of 50 km/day, and private developers vying with each other to enter the Guinness Book for the fastest-ever completion of stretches.

Accompanying this commendable pace have been five structural shifts.

First is the shift from “carriageway widening” to “greenfield expressways” with virgin alignments. In fact, five greenfield expressways are getting close to their completion dates of FY24/25. These are the Delhi-Mumbai, Ahmedabad-Dholera, Bengaluru-Chennai, Delhi-Amritsar-Katra, and Kanpur-Lucknow. Additionally, 22 greenfield expressways are also under development. including Jamnagar-Amritsar, Chennai-Salem, Indore-Hyderabad and Kharagpur-Siliguri.

Second, there has been a structural shift in the funding pattern. Gadkari was quick to realise that PPP was on a rapid decline and that private capital could no longer be relied upon to fund road development. Smartly, he effected a quick shift to state funding under the combination of EPC and hybrid annuity. BOT (classic PPP) declined from its dominant 85% share of road investments in 2013 to close to zero by 2021.

Third, there was a deliberate embrace of medium and smaller-sized contractors to reduce the dominance of a group of “established” players. This was achieved by changes in bidding criteria and reduction of project package sizes. While it did lead to some undesirable fallouts on quality and irrational bidding, overall, it achieved its objective. The number of contractors/concessionnaires winning projects was around 53 in the FY16-FY20 period, which rose to around 91 by FY22. The ratio of projects awarded to old versus new players changed from 60:40 to 40:60.

The fourth is the e-enablement of toll collection. The general push for digitalisation of payments, reducing delays at toll plazas, and a desire to put an end to cash being mishandled led to the forceful implementation of FASTags—the electronic toll collection system. This has had a remarkably high impact with a penetration of 97% at NH toll plazas.

The fifth is the increasing focus on “corridor-based” development. In FY22, 78% of the central funds deployed were for corridors vis-à-vis zero around 2017. More than 65% of the Centre’s road projects in the National Infrastructure Pipeline are corridor-based. Now, the linkage with economic nodes is getting further fine-tuned by aligning with the GatiShakti platform and moving rapidly to foster multimodalism.

All these were obviously achieved with a substantial step-up in funding from the exchequer. Expenditure rose from Rs 20,809 crore in 2009-10 to Rs 2,18,455 crore by 2021-22. And the unintended consequence was that NHAI got saddled with a burgeoning debt burden. NHAI’s debt increased from Rs 45,270 crore in FY16 to a staggering Rs 3,48,385 crore in FY22. While this rang alarm bells in the finance ministry, it has to be recognised that this debt is backed by the creation of a very valuable stock of national assets. NHAI has on its books an asset portfolio of 38,315 km of tolled highways, clearly valued at many multiples of the debt. Further, in striving to reduce debt, NHAI is at the forefront of monetisation, and has raised close to Rs 54,000 crore through InvITs and toll securitisation till FY22. An additional Rs 35,000 crore is planned for FY23.

However, an infrastructure programme of this scale will attract its fair share of criticism. India’s highway-accident numbers figure among the highest in the world—not just because of improper driving but also because of faulty road design and inadequate highway traffic supervision and enforcement. In spite of some relief through the FASTags system, there is significant dissatisfaction over the toll-plaza experience. The availability of highway amenities is still inadequate even as the overall driving experience is poor due to most stretches being non-access-controlled.

So far as NHAI is concerned, sporadic reports have surfaced in the media about corruption at different levels. Gadkari has publicly voiced frustrations about the pervasive bureaucracy at NHAI and lack of speedy decision-making, particularly in dispute resolution. There is also the phenomenon of rapid changes in the leadership at the nationally important institution. Since October 2007, NHAI has had 15 chairmen! Moreover, it doesn’t have its own cadre and an esprit de corps like other successful PSUs. Most of its manpower is on deputation. This needs to change.

Challenges remain too. Land acquisition and clearance processes need speeding up. Adherence to State Support Agreement needs more attention. GPS-based tolling is the next big expectation, leading to not just dismantling of toll plazas but also charging for actual road-stretch consumed. Organisationally, the issue of bifurcating NHAI for construction and for operations, maintenance and monetisation is often alluded to. Digitalisation of project implementation, decision-making and payments with full and transparent access to EPC players and developers is a big expectation. All said, the final results are awesome. The national-highways network increased by 55% since 2014. It had a combined length of 91,287 km on March 31, 2014, which rose to 1,41,190 km by February 2022.
India shows the world how to do it!

The author is Infrastructure sector expert, and founder & managing trustee of The Infravision Foundation