National highway projects have hit a “speed bump” in the first quarter of the current financial year, with declining road project awards and slackening construction by both the ministry of road transport and highways, and the National Highways Authority of India (NHAI).

“National highway projects hit a speed bump in the first quarter of this fiscal, with awarding by the Ministry of Road Transportation and Highways (MoRTH), including the National Highways Authority of India (NHAI), falling a sharp 42% on-year to 969 km,” says a Crisil report.

The Centre awarded 1,681 km in the April–June quarter of FY22, despite it being the period during which a deadly second wave of Covid 19 gripped the nation leading to localised lockdowns. Rising inflation and material cost are also gnawing the highway infrastructure creation in the country. “Construction also slackened, down 14% on-year to 1,966 km, translating to 22 km per day, as a surge in input prices led to developers delaying procurement of materials. Also, some projects awarded last fiscal are yet to commence construction,” the report adds.

It says the deceleration comes on the back of weak road construction activity in the previous fiscal, which declined 21% to 29 km per day, from a high of 36.5 km per day seen in fiscal 2021, owing to an extended and uneven monsoon, and lower awarding of projects earlier.

“Against this backdrop, awarding would need to scale up significantly in the next nine months to achieve the ministry’s ambitious target of constructing 50 km per day,” says the report.

Crisil, however, maintains the outlook remains positive. “Project awarding had touched a high of 12,731 km last year. This fiscal, CRISIL estimates the ministry to award 12,000-13,000km of national highway projects, largely under Bharatmala, with uptake spurred by developer-friendly measures under Atma Nirbhar Bharat that have been extended till October 2022,” the report says.

“As for construction, we expect the pace to pick up post monsoon. However, it will still manage to reach only 32- 34 km per day this fiscal as input prices are expected to remain elevated,” it adds.

Crisil report on highway prospects

Highway projects hit a speed bump in Q1, FY23: Crisil