The state-led, road-sector capex is expected to witness robust growth over the next three years, supported by several expressway projects launched or announced by the states of Maharashtra and Uttar Pradesh, according to ICRA. In Maharashtra, the estimated spend for the Nagpur-Mumbai Expressway alone is Rs 350 billion over the next three years, in addition to a proposed road improvement programme through the hybrid annuity mode (HAM). Similarly, in Uttar Pradesh, for the Purvanchal and Ganga expressways together, the estimated spend over the next three years is around Rs 200 billion. ICRA estimates that the state-level spend on roads will increase at a CAGR of 22 per cent from the current level of Rs 960 billion in FY2019 to Rs 1.43 trillion by FY2021. Elaborating upon capex outlay by the states and Centre, Shubham Jain, Vice-President and Group Head, Corporate Ratings, ICRA, says, “Historically, the cumulative spend by state governments on roads was much higher than the Central Government spend on national highways. Most of it went unnoticed because of the low proportion of PPP projects and wide dispersion across various geographies and authorities. Also, most of these contracts were smaller in terms of value, which were lapped up by the local EPC contractors.” This trend witnessed a reversal in FY2018 when the Government of India approved the new highway development programme (including Bharatmala Pariyojana Phase 1) in October 2017, which involves national highway development of around 83,000 km by FY2022. The estimated fund requirement for the development of national highways under the new programme is about Rs 6,923.24 billion up to FY2022. Consequently, this led to an increased outlay by the Centre from FY2018 onward. In terms of capital allocation for the road sector by states, the top five states are Uttar Pradesh, Tamil Nadu, Maharashtra, Karnataka and Odisha, which together accounted for 53 per cent of the aggregate spend in the sector. On average, these states have deployed around 27 per cent of the development capital outlay towards roads and bridges. Among non-special category states, Chhattisgarh and Jharkhand are the two top states in terms of proportion of development outlay (around 35 per cent) deployed towards road asset creation, while Telangana and Andhra Pradesh are the laggards with less than 10 per cent of development capital allocation.