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Pace of road construction got twice under Modi’s government

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The dynamic infrastructural development in the country under Narendra Modi’s government has multiplied the speed of road construction in the last four years.

“The government’s spending on road construction is expected to push the annual growth in revenue of road construction companies to 20% till 2020. We expect topline growth for these companies to sustain at 20% in this fiscal and the next two, backed by strong order-books. Together, these companies are estimated to have an order book of Rs 1.3 lakh crore last fiscal, which, at over 3 times the revenues of these companies in fiscal 2018, provides high revenue visibility”, said Sachin Gupta, Senior Director, CRISIL, considering the recent reports.

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As per our news sources, in the year 2018, there has been a road construction of nearly 27 km per day which is almost twice than that in the year 2014. Besides this, with flagship road construction programme(Bharatmala) of Prime Minister Narendra Modi’s this pace is expected to be pushed further in the near future. “Construction is expected to accelerate to 32 km per day by 2020 given NHAI’s sharp focus on the award of projects under the Bharatmala programme,” the report added.

As per recent reports, the hybrid annuity model (HAM) was approved by the Road Transport & Highway Minister Nitin Gadkari in 2016. This model was not only designed to speed up the highway projects but is also focused to revive the Public-Private-Partnership (PPP) mode and attract more investments in the sector.

As per recent reports by CRISIL, the HAM projects will need about Rs 70,000 crore of funding through an optimal mix of debt and equity. The reports on considering the positive market sentiments said that additional investment of Rs 12,000 to 15,000 crore of equity in the projects won’t cause problems.

As per our news resources, 40% of the cost under HAM will be provided to private players by the government in order to start the project while the remaining amount will be invested by the developer itself.

Regarding this, Rs 5.97 lakh crore was allocated by the government to the infrastructure sector In Budget 2018, raising it from Rs 3.96 lakh crore spent in FY18.

 

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