Page 38 - Forbes - India (January 2020)

Pre-Budget S P ecial

Roadblocks Ahead:

Expect Delays

Land acquisition and lack of funding hold up work as government barely meets
a quarter of its target under the Bharatmala project ahead of its 2022 deadline

By Pranit Sarda

ike the economy, highway
construction seems to have
hit a slowdown. Halfway
through the 2022 deadline of
L the government’s ambitious
Bharatamala Pariyojana, only
27 percent of project contracts
have been awarded, according
to credit rating agency ICRA.
Bharatmala is a central government
scheme to build highways, cleared
38 by the Union Cabinet on October
25, 2017. It aims to complete Phase
I—24,800 km of fresh roads and
10,000 km of roads subsumed from
the National Highways Development
Project—by 2022, at a cost of `5.35 The Dwarka Expressway, connecting Delhi and Gurugram, was expected to be completed by
2012, but has been delayed because of land acquisition issues
lakh crore. However, by September
2019 contracts for only 9,577 km of projects, worth over `1.5 billion, land. Now, they are willing because
the 34,800 km had been awarded. facing implementation delays, issues of the generous compensation.”
Rajeshwar Burla, vice president, pertaining to land acquisition were Sharma says in Indian Infrastructure
associate head-corporate ratings, identified as one of the important that the NHAI has been able to
ICRA, says, “Ideally, the government causes for the delay in almost 50 get about 13,982 hectares in 2018-
should have awarded everything by percent of the projects. Besides, 19, the highest in the past 18 to 19
now because it takes at least 2 to 2.5 about 5 percent of these projects years. But, according to ICRA, the
years to complete a road project.” were delayed exclusively because average cost of acquisition has gone
What are the roadblocks that the of land acquisition issues.” up from `0.9 crore per hectare to
government have hit? First, land The government’s burden to `3.4 crore per hectare; the awarding
acquisition that can cost at least 25 to acquire land has risen in compliance cost of contracts has, therefore, gone
30 percent of every project; there can with the Right to Fair Compensation up from the initial plans of `15.37
be projects where it is even higher and Transparency in Land Acquisition, crore per km to `24 crore per km.
than the cost of construction. It not Rehabilitation and Resettlement While costs have risen, financing
only escalates overall project costs, Act, 2013, that mandates it to pay has nosedived. “Historically, banks
but also causes enormous delays. four times the market value of were the main source of finance for
VK Sharma, chief general manager, acquired land in rural areas and infrastructure projects. But they have
land acquisition, National Highways two times in urban areas. Rohan constraints in providing long-term
Suryavanshi, head-strategy and
VINAY GUPTA Authority of India (NHAI) writes planning at Dilip Buildcon, a road liability mismatches,” says Debabrata
finance as it leads to significant asset
in the September 2019 issue of the
magazine Indian Infrastructure: “In
construction company, says, “Before
Mukherjee, head-business at NIIF
Infrastructure Finance Limited.
a study conducted by NHAI on 106
2013, people didn’t want to part with
forbes india • january 31, 2020