New Delhi: Soaring land acquisition costs and a reluctant private sector have emerged as roadblocks in the Modi government’s ambitious Bharatmala project, which aims at stitching together a 34,000-km highway network across India, ThePrint has learnt.
The cost estimate for the project has more than doubled in the two years since its launch, sources in the Union Road Transport and Highways Ministry have told ThePrint, putting it way behind the targeted deadline of 2022.
While the first phase was approved by the Union Cabinet in October 2017 with a budget of Rs 5.35 lakh crore, the revised estimate stands at over Rs 13 lakh crore, a rise of 143 per cent, the officials said. The escalation has mainly been on account of high land acquisition cost, the sources added.
According to the officials, land acquisition costs have increased more than three times since October 2017. “The prevailing cost of civil construction has also gone up [due to inflation],” one of the officials said.
Land acquisition costs have surged since the new land acquisition law was implemented in 2013.
To lessen the burden of the high land acquisition costs, the officials said, the ministry proposed that states share the tab, but not many have responded positively.
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‘More pressure’ on road ministry
The Union Road Transport and Highways Ministry, which is piloting the programme, is likely to move the Cabinet soon to get the revised budget approved, a second government official added.
The first official said this will not only push back the completion deadline of the ambitious programme, but also put more pressure on the ministry to scout for additional resources.
“The ministry will have to extend the 2022 completion deadline. The Rs 5.35 lakh crore budget was approved for the first phase, which had to be implemented between 2017 and 2022,” the official added. “There is no way we can complete it within the deadline.”
Under Bharatmala Phase-I, the government aims to develop 34,800 km of highways running through economic corridors around manufacturing hubs as well as borders, while also boosting coastal and port connectivity.
Among other targets, around 1,837 km of new expressways will be developed under the project, which is expected to give a big fillip to India’s slumping economy by creating jobs.
Until March 2019, the ministry had approved 255 road projects, spanning 9,613 km, under Bharatmala, with a financial outlay of Rs 10,000 crore.
Private developers reluctant
According to the officials, with budgetary allocation not enough to meet the requirements, the highways ministry is looking to raise more than half the funds needed from the market and through private investments.
However, they said, the government’s efforts to draw in private participants to bolster funds had evoked a lukewarm response so far.
“Private developers are not coming forward like they did earlier,” a third official said. “The appetite for BOT (Build-Operate-Transfer) projects has dried up. Private developers are finding it difficult to get loans from banks.”
The officials said the ministry was now working on a slew of measures, including securitisation of toll revenue, where banks are asked for cash in lieu of the toll collected from certain highways (the charge of maintenance still rests with the government).
Other options include auctioning completed highway projects and tapping foreign debt and bond markets, the officials added.
“We plan to raise Rs 1 lakh crore through the TOT (toll-operate-transfer) model, where completed public-funded highway stretches are auctioned to private players for operation and maintenance in lieu of upfront money paid by the latter,” one of the officials said.
Last month, the ministry also inked a deal with the National Investment and Infrastructure Fund, the government’s fund manager, to bring long-term capital through alternatives like pensions and sovereign funds from other countries.
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Only plans are discussed. Some works should also be going on mn. Definitely when completion period is in22, then by now some works should have beeN completed. It is not known whether works started on bharath mala.
Under Bharatmala first of all four lanning of Mumbai to Kolkata via Nagpur highway should be completed
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