Cloud over 40 km/day as highway construction, contract awards lose steam

The construction of highways and awarding of contracts in the current financial year seem to be losing the sprint which was visible in 2020-21 —when a record 13,435 kms of highways were built, translating into 37 kilometres-a-day, despite the lockdown caused due to Covid-19.

According to data from the Ministry of Road Transport and Highways, 4,450 kms of highways have been constructed till October in the current financial year, translating into a pace of 21kms-a-day. This is almost half of the per day construction target of 40 kms-a-day announced by Union Transport Minister Nitin Gadkari. A total of 4,956 kms of highways were constructed in the same period of the previous financial year.

The awarding of highway contracts, too, has remained sluggish at 4,913 kms in the April-October period of the current financial year, compared with 5,777 kms in the same period of 2020-21.

The transport ministry data reveals that in every month of the current financial year barring April, highways have been constructed at a slower pace than the last year. In October this year, highways totalling 626 kms in length were constructed, down almost 38% from 1,006 kms in the same month of the previous year. Construction of 469 kms in September this year and 428 kms in August this year, too, was down 25% and 36%, respectively from the length constructed in the same months of the previous year.

It may be noted that the best monthly construction in June this year at 814 kms, too, was down 17% from 976 kms of highway length constructed in June last year.

The pace of highway construction in the country has come down, despite a strong pipeline of active contracts on the back of which the Centre targeted to achieve a rate of 40 kms per day in the current financial year. According to data from the ministry, contracts worth ₹9,22,404 crore are under implementation as of March 31, 2021. However, the current pace of construction is only half the targeted speed of highway construction in the country.

Experts in the sector attribute the decline to delays in the financial closure of the projects. “The comparatively small decline in the speed of implementation in the current fiscal relative to the last fiscal, is perhaps driven by more immediate issues, such as the impact of work of the site on account of the second wave of pandemic, and the delays in the financial closure for the projects during the pandemic,” says Neelakantan V R, Partner, Shardul Amarchand Mangaldas & Co.

According to Kushal Singh, Partner, Deloitte India, the pandemic has disrupted the entire chain of events post the project award. “Processes like financial closure, which follow contract award, have been impacted,” says Singh, adding that better progress may be seen if one does not take the projects awarded last year into consideration.

That said even the highway contract awards have gone down considerably till date in the current fiscal over the last financial year. Barring August and April, this year's highway contract award is lower than the previous year.

In October this year, for example, contracts for 304 kms were awarded. This is less than half of the construction contracts spanning 725 kms that were awarded in October 2020. Similarly, even in the best month of September this year, highway contract awards for 1,348 kms were down from contracts for 1,544 kms awarded in September 2020.

In August this year, the highway contracts for 827 kms were marginally up from 806 kms in August last year, while in April this year construction contracts for 311 kms were awarded, up from 260 kms in April last year.

Interestingly, in May last year, when the entire nation was under a strict lockdown, highway contracts for 487 kms were awarded by the ministry, which came down to 352 km in May this year. It may be noted that a ravaging second wave of the Covid-19 pandemic caused disruptions in May this year, but no national lockdown was imposed to contain the spread of the virus, leading to continued economic activity.

It may be noted that in FY21, highway construction picked up in the second half of the financial year increasing at more than 70 kms-a-day at one point of time in the last quarter. 534 kms length was constructed within a week in January this year, translating into 76 kms-a-day.

Between February 28 and March 22 of this year, 1,170 kms length was constructed, translating into an average daily construction of 53 kms.

Despite the pandemic-induced disruptions, a record length of 13,435 kms of highways was built in the previous financial year. In 2019-20, highways totalling 10,237 kms were constructed as per data from the transport ministry.