Eight years after it took off as a prominent signpost of India’s drive to be one of the world’s fastest growing economies, the National Highways Development Programme (NHDP) with its planned network of world-class highways and an investment of Rs.2,20,000 crore is a picture of missed deadlines, policy blips, red-tape, and most importantly, delayed economic benefits to the country.
Crucial stretches of the NHDP, including critical corridors meant to cater to high density traffic and connect state capitals with the Golden Quadrilateral (GQ), are stalled.
Either projects have been pushed back, contracts delayed or cut-off dates for bidding extended for lack of interest among contractors. As a result, of the 32,939 km of the NHDP, barely 9,463 km encompassing all its six phases stands ready, with no signs of when the remaining sections will be completed.
The Government now talks of a 2015 target but given the status and pace at which it is moving, even that may remain a dream. According to the man most closely associated with the project, former Union minister of shipping, roads and transport in the NDA regime B.C. Khanduri, the UPA Government appears to have deliberately neglected the NHDP set in motion in 1998 by former prime minister Atal Bihari Vajpayee.
Khanduri points out that despite a slowdown in the NHDP’s pace in the run-up to the 2004 elections, the foundation was firmly in place during his tenure, which included a restructured National Highways Authority of India (NHAI), geared to implement the mega highways development scheme.
“We rolled out a financing arrangement from a cess pool created by a levy of Re 1 per litre on petrol and diesel, ensured clearances to land hurdles, imported machinery to get the best technology for making roads. We even put in incentives to expedite the NHDP by giving 1 per cent of the contract value every month as bonus up to a maximum of six months for early completion,” says Khanduri.
Not surprisingly, funds for the first phase, amounting to around Rs.32,000 crore, were fast-tracked. Also by early 2004, the Government had invited bids for seven contracts in another set of projects called “Bharat Jodo Pariyojana”, renamed Phase III by the UPA. By the time the NDA remitted office in May 2004, about 2,800 km of the GQ and 630 km of the North-South-East-West (NSEW) corridor was in place, according to Khanduri.
But progress under the UPA has been particularly tardy. The GQ and the NSEW, which were expected to be onstream by 2006 and 2008 respectively, as per the UPA’s revised deadlines, are behind schedule. The most damning aspect is that the UPA has failed to finish any of the highway projects in phases III, IV, V and VI, started in its own tenure. The rate of completion of targets in all phases has slipped from 73 per cent in 2005-06 to 56 per cent in 2007-08.
Matters have worsened in the last few months. According to the Ministry of Road Transport and Highways (MoRTH), the NHAI has not awarded a single project between July and December last year, holding up 60 projects worth Rs.70,000 crore. But going by fresh official estimates, the cost of these projects may have gone up by 20-40 per cent.
If this is factored in, the UPA’s dilly-dallying may have held up projects worth Rs.84,000-Rs.98,000 crore. So why are the ministry and the NHAI sitting on projects at a time when, as per the 11th Five-Year Plan, GDP spending in infrastructure is to be raised from the current 5 per cent to 10 per cent? About 20 per cent of the expenditure has to come from private players, says Gajendra Haldea, adviser to the deputy chairman, Planning Commission. That is not a worry, for according to Haldea, the Government is in a position to make huge investments in the NHDP.
The problem is dwindling private participation. Bidders have melted away, leaving projects stranded. According to MoRTH secretary, Brahm Dutt, bidding for all these 60 projects were supposed to have been over by 2008. “But of the 35 auctioned last year, the Government has secured bids for only 16 projects. In six of these, only one company each has placed bids,’’ admits Dutt. An embarrassed NHAI tries hard to explain that the economic slowdown in India has made it difficult to find bidders. “The funds crunch and high costs of borrowing have made road projects unviable for private players,” explains Didar Singh, member-finance, NHAI.
Almost all companies are shelving their investment plans while players like Maytas Infra, Gammon and GMR Infra have simply stayed away despite being shortlisted. In fact, NHAI recently extended deadlines for several projects to February and March. Infrastructure experts argue that much of the private investment would flow into the economy if the NHAI were not to quibble about issues like qualification criteria for bidders last year.
The norms permitted only five players for participating in the bidding process which was opposed by builders. The decision was reversed but precious time was lost in the process. More delays took place after the NHAI banned 17 contractors, including Askons, Dolomite and Essar, from bidding following the deteriorating quality of roads. The NHAI’s own laxity is also costing the nation dear. About 30 per cent of land for the 30,000 km of road projects under the NHAI is yet to be acquired, thanks to disputes concerning land and forest clearance.
Part of the reason for the paralysis in the NHDP is also all too familiar; the so-called “system” and politics. The NHAI has had five chairmen in the past two-and-half-years with Union Minister of Surface Transport and Highways T.R. Baalu having been hauled up by the Delhi High Court for “day-to-day interference” in the affairs of the NHAI.
Baalu’s approach has made nonsense of the freedom given to the NHAI in 2003 to clear projects without going to the Cabinet. The NHAI now has to get prior approval of projects from the Government’s Public-Private Partnership (PPP) approval commission. Brijeshwar Singh, current NHAI chief, dismisses all talk of frequent changes of chairmen affecting NHDP progress as “flattering”. “The success of the NHDP depends upon the choice of projects and the Government’s ability to push them forward,” says Singh.
It is not that solutions are hard to find. The NHAI has already decided to release the entire 40 per cent Viability Gap Funding, aimed at covering the difference between the economic and financial rate of return on a project, to private developers at one go. “The recent stimulus package, allowing India Infrastructure Finance Corporation Ltd to raise Rs.40,000 crore for projects has enough punch for kickstarting an entire array of PPP projects worth Rs.1,00,000 crore in the highways sector,” says Amit Mitra, secretary-general, FICCI.
The bottom line, however, is that there are no shortcuts to progress. In the case of NHDP, it is a long and winding road, but reaching the destination is only possible if the Government narrows the distance between rhetoric and reality.