Highway anomaly: Road-making dips while ministry capex at 3-yr high

An anomalous situation seems to be emerging on the highway construction front by the ministry of road transport and highways and the National Highways Authority of India (NHAI). Government data reveals that while the utilisation of the budgetary allocation on capital expenditure by the transport ministry is higher in the current financial year over the previous year, the pace of highway construction is considerably down.

This essentially means that while the transport ministry and the implementing agency, NHAI, are utilising the budgetary funds really fast – in fact faster in comparison to the other ministries – the same is not getting reflected in the actual construction per day.

According to data from the ministry of finance, transport ministry has utilised 68% of the capital expenditure of ₹1,08,230 crore allocated to it in the budget at ₹73,797 crore during April-October period of the current financial year. The utilisation is up from 58% during the same period of the previous financial year. The capital expenditure in the corresponding period of the previous financial year stood at ₹47,690 crore against the budget estimate of ₹81,974 crore for FY21.

The current year’s capex utilisation by the ministry is at a three-year high. The capex utilisation by the ministry during the April-October 2019-20 was 63% of the budget estimate, and 75% during the corresponding period in the preceding financial year.

However, even as the capex utilisation rate has gone up, the construction rate in terms of kilometres per day is significantly down this year over FY21. If one juxtaposes capital expenditure data with the construction per day data of the transport ministry, the anomaly comes to the fore.

According to the details shared by the transport ministry with the prime minister’s office (PMO), the ministry has constructed 5,118 kilometres of national highways during April-November this year, compared with 6,207 kilometres during the same period in the previous financial year, registering 21% decline in the pace of construction. Both industry and the government are tight-lipped on the issue, which has major ramifications for the sector which had been one of the top performing sectors even in the wake of the disruptions caused by the pandemic last year.

At 5,118 kilometres in April-November, the highway construction pace come to a mere 21 kilometres a day, which is almost half the target of 40 kilometres a day set by transport minister Nitin Gadkari for the current financial year. Highway construction is losing pace despite a good pipeline of the projects. The pipeline of highway projects under implementation as on March 31 stood at ₹9,22,404 crore.

It may be noted that despite the disruptions caused by the pandemic in the previous financial year, a record length of 13,435 kilometres of highways were built. In 2019-20, highways totaling 10,237 kilometres were constructed as per data from the transport ministry.

Interestingly, in FY21, highway construction picked up in the second half of the financial year increasing at more than 70 kilomtres a day in January this year. Highways spanning around 534 kilometres in length were constructed within a week in January this year, translating into a rate of 76 kilometres per day. Between February 28 and March 22 of this year, 1,170 kilometres length was constructed, translating into an average daily construction of 53 kilometres. With the current pace of construction, the target of 40 kilometre a day for the current financial year seems to be receeding in the horizon, unless it picks up in the remaining part of the fiscal.