Editorial Articles

Volume-1-7 September, 2018

India's Road Sector to Boost Employment Opportunities

Dr. Ranjeet Mehta

Roads provide access to the outside world. Roads are the conduit of life's activities. Roads make a crucial contribution to economic development and growth and bring important social benefits. They are of vital importance in order to make a nation grow and develop. In addition, providing access to employment, social, health and education services makes a road network crucial in fighting against poverty. Transport infrastructure is one of the most important factors for a country's progress. By linking producers to markets, workers to jobs, students to school, and the sick to hospitals, roads are vital to any development agenda. World Bank lends more for roads than for education, health, and social services combined. 
Road Infrastructure is a major sector that propels overall development of the Indian economy. India's economy is big and getting bigger. It has been estimated that India will become the world's third largest economy by 2050. The importance of road transport infrastructure for sustained economic development is well recognized. High transaction costs arising from inadequate and inefficient infrastructure can prevent the economy from realizing its full growth potential regardless of the progress on other fronts. The performance of infrastructure is largely a reflection of the performance of the economy.  Although India has a large and diverse transport sector with its own share of challenges, they can be overcome by energy-efficient technologies and customer-focussed approach. One cannot overemphasize the importance of transportation than call it the 'lifeline' of a nation. It has been proven by so many instances how transport infrastructure has added speed and efficiency to a country's progress.
The development of road infrastructure in India is witnessing great momentum. Robust demand, higher investments, attractive opportunities and policy support changed the face of the road sector in the country within four years. The Indian road network is the second largest in the world at 5.6 million km and with rapid growth in national and state highways, it is bound to grow exponentially. Road infrastructure is one of the major priorities for the Indian government as the roads carry more than 60% of all goods and 85% cent of total passenger traffic.
India has awarded road contracts at a "breakneck pace" in 2018, raising the prospect that orders will reach a record this financial year. Orders from the National Highway Authority of India may cross Rs 1 lakh crore ($15.3 billion) in the 12 months through March, climbing from Rs 60,000 crore a year ago. Ministry of Road Transport and Highways, and National Highways Authority of India (NHAI) has gone about in a very structured and methodical fashion to address key sector issues, working out ways to address stalled projects to get them back into the system, policy changes to make the sector more investor-friendly and bringing in new models that suited the sector requirements at various points in time.
India's road infrastructure has seen consistent improvement in the last few years. Connectivity has improved and road transportation has become a focus of rapid development. Roads are providing better access to services, ease of transportation and freedom of movement to people. Recognizing the significance of a reliable and swift road network in the country and the role it plays in influencing its economic development, the Ministry of Road Transport and Highways (MORTH) has taken up the responsibility of building quality roads and highways across the country.
Some of the major  road infrastructure development measures in India  in last four years are as follows:-
 The seven phased NHDP is being implemented by the National Highways Authority of India (NHAI) with a total estimated expenditure of USD 92 billion. As the largest highway development project in the country since 2000, more than 49,260 km of the roads are being upgraded to match international standards.
Development of National Highways to 4/6 lane standards on the following routes: Golden Quadrilateral connecting 4 major metropolitan cities viz. Delhi-Mumbai- Chennai-Kolkata. North South & East West Corridors (NS-EW) connecting Srinagar to Kanyakumari and Silchar to Porbandar with a spur from Salem to Cochin.Road connectivity of major ports of the country to National Highways 4-laning of 4,000 km of National Highways Upgradation of about 20,000 km of National Highways to 2-lane paved.Six laning of 6,500 km of existing 4 lane National Highways Development of 1,000 km of fully access controlled expressways under Public Private Partnership (PPP) model following Design - Build - Finance - Operate (DBFO) approach. Nine such expressways have been identified along High-Density Corridors. These corridors will seek to ensure quicker connectivity.Construction of standalone Ring Roads, Bypasses, Grade Separators, Flyovers, elevated roads, tunnels, road over bridges, underpasses, service roads, etc. on BOT (Toll).
The government has already fast-tracked at least 24 roads and highways projects and is under planning to approve nearly 10,000kms of national highway. Moreover, the National Highways Authority of India (NHAI) plans to build 50,000 km of roads worth $250 billion by 2022 as part of a long-term goal of doubling the length of the national highway network to two lakh kilometres.In a bid to fulfill the ambitious goal, the target pace of road construction has been increased to 28km a day, making way for greater connectivity in no time.
The government is implementing various projects across the length and breadth of the country to solve woes of the common man. The Ministry has introduced notable trends that will make India number 1 in road infrastructure in the coming times.
Bharatmala Pariyojana
The Union cabinet on 25th October, 2017,  approved an outlay of Rs. 6.92 trillion for building an 83,677 km road network over the next five years. The largest ever outlay for road construction comes in the backdrop of the Modi Government implementing the Goods and Services tax (GST) which aims to create a common market by dismantling inter-state tariff barriers. A robust road infrastructure will help in that direction.
The road construction push includes the Bharatmala Pariyojana with a Rs. 5.35 trillion investment to construct 34,800 km of roads. In addition, Rs. 1.57 trillion will be spent on the construction of 48,877 km of roads by the state-run National Highway Authority of India (NHAI) and the Ministry of road transport and highways.
Bharatmala includes economic corridors of around 9,000 km, inter-corridor and feeder routes of around 6,000 km, 5,000 km roads under the National Corridors Efficiency Program, border and international connectivity roads of around 2,000 km, coastal and port connectivity roads of around 2,000 km, expressways of around 800 km and 10,000 km of NHDP roads. The total length in phase 1 comes to around 34,800 km. Bharatmala project will start in Gujarat and Rajasthan, followed by Punjab and subsequently traversing the Himalayan belt through Jammu and Kashmir, Himachal Pradesh, Uttarakhand, parts of Uttar Pradesh, Bihar, West Bengal, Sikkim, Assam, Arunachal Pradesh, Manipur (next to the Indo-Burmese border) and then to Mizoram. Northeastern states have been given special focus in the project and international trade is a key aspect as well.
Employment Generation
It is expected that the Bharatmala will bring down logistics cost, impacting exports and investment. Government's marquee Bharatmala scheme will create 100 million man-days of jobs during the construction phase and 22 million permanent jobs due to the increased economic activity triggered by it. The government expects the road construction programme in pipeline  including Bharat-mala  will generate 142 million man-days of jobs. Bharatmala will not only boost the economic activity but the number of road accident deaths will reduce by half as per the Hon'ble Minister Mr. Nitin Gadkari. According to the ministry of road transport and highways, a combination of factors such as human error, road defects, manufacturing defects in vehicles and worsening traffic congestions is raising the level of human vulnerability to accidents.
All these steps will provide a positive push to the infrastructure segment in the economy. Mobilizing large quantum of funds required, especially from the private sector, would be vital for the successful implementation of these projects. This Infrastructure plan will contribute 2-3 percent to the GDP.  Roads built under India's ambitious Bharatmala programme will increase vehicle travelling speed by around 20-25%, thereby helping reduce logistics costs. This in turn would help reduce India's supply chain cost to 6% from the present levels of 18% and will create 2 lakh crore jobs as per Mr  Gadkari Union Minister of Ministry for Road Transport, Highways and Shipping, and Water Resources, River Development and Ganga Rejuvenation.
It can be concluded that the prospects for India's roads sector have brightened with new project awards and fewer stranded assets. Regulatory changes and greater government spending have helped revive the sector in last four years.  Faster clearances and dispute resolution, last mile funding and easier exits for companies are among steps taken by the Modi Government to help the sector since it came to power in May 2014. With the Government permitting 100% FDI in the road sector, several foreign companies have formed partnerships with Indian players to capitalise on the sector's growth. The Indian infrastru-cture sector offers massive investment opportunities to the tune of about Rs. 28.2 trillion in coming years. The government has cleared several project proposals and offered a one-time capital infusion to revive those short of funds including  hybrid annuity model, where it commits up to 40% of the project cost. It is acknowledged that roads enhance mobility, taking people out of isolation  and therefore poverty. The road transport industry is the backbone of strong economies and dynamic societies. It is therefore legitimate and indispensable to safeguard an industry that is vital to economic growth, social development, prosp-erity and, ultimately, peace and which plays a crucial role in everyone's life in industrialized and developing countries alike by meeting the demand for the sustainable mobility of both people and goods.The road transport industry is indeed instrumental in interconn-ecting all businesses to all major world markets, driving trade and  creating employ-ment opportunities.
(Dr. Ranjeet Mehta is Principal Director, PHD Chamber of Commerce and Industry New Delhi) Email ranjeetmehta@ gmail.com
Views expressed are personal.