As the current fiscal year is near ending, to roads sector seems unlikely to meet its targets again. The tally for the period from April 2016 to December 2016 portrays a marginal fall in projects awarded in the roads sector compared to the same period a year ago.
Roads have been the backbone of infrastructure activity in India, in turn driving other sectors such as construction. Given that the sector is unlikely to meet its targets, does not spell good news.
As per a report by Jefferies India in February this year, the National Highways Authority of India (NHAI) and the Ministry of Road Transport and Highways (MoRTH) had awarded road projects of about 3,200 km and 3,100 km, respectively, till mid-February. Notably, NHAI had watered down its forecast for FY2017 from 10,000 km to 6,700 km.
While firms have hastened execution of projects, yet the 41 km per day completion target is too ambitious, given the current run rate of around 17 km per day. Reasons of delay include land acquisition hurdles, difficulty in financial closures, few lenders for Hybrid Annuity Model (HAM) projects. Reportedly, only 15 of the 35 projects awarded under HAM have achieved financial closure, while some have been cancelled. Also, demonetisation had adversely affected revenue for road developers as toll payments were waived for nearly half of the third quarter