M Murali examines the key developments in the Indian roads sector and the huge potential to take the sector to a brighter 2016. India has the second largest road network in the world, aggregating 4.7 million km.
The Cabinet has approved the proposal for Bharatmala Pariyojana Phase-I along with other programs on October 24, 2017, which involves national highway development of around 83,000 km (including Bharatmala Pariyojana Phase-I is 24,800 km) by FY2022.
Over the years, this powerhouse has emerged as a leading surface transportation infrastructure company and is widely recognised as the pioneer of public partnership in India's surface transportation sector.
The Union Budget 2018 has struck a fine balance between fiscal prudence and providing growth boosters to the economy. It is a progressive budget and in line with the development priorities of the Government. The Finance Minister has made a strong attempt to pump prime the rural economy, agriculture and infrastructure sector.
The first bundle of highway projects to be awarded through the toll-operate-transfer (TOT) route involving 10 stretches – six highways along the East Coast in Andhra Pradesh and part of the Golden Quadrilateral (GQ) – the busy Kolkata-Chennai route and the remaining four located in Gujarat, are estimated to be valued at Rs 6,000 crore, as per ICRA.
As the GDP figures of 5.7 per cent appeared in the press, the murmurs began. GST was already making lives difficult for the traders and businessmen, and the ghosts of demonetisation had not completely vanished yet.
Early signs of a revival of the infrastructure sector are evident with the improvement in the financial profile of players. Although many infrastructure players are still struggling with their highly leveraged balance sheets, infrastructure companies with exposure to the airport and the highway sectors have started witnessing an improvement in their operational and financial performance.
GST rate reduction from 28 per cent to 18 per cent has provided a breather to the construction equipment industry. Although 15 per cent of items would still be at 28 per cent, the major grouse has been addressed.