Cabinet approves Rs7 trillion road construction plan, including Bharatmala

India announced an outlay of Rs6.92 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 National Democratic Alliance (NDA) 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 Rs5.35 trillion investment to construct 34,800km of roads. In addition, Rs1.57 trillion will be spent on the construction of 48,877km of roads by the state-run National Highway Authority of India (NHAI) and the ministry of road transport and highways.

To expedite the Bharatmala projects, apart from ministry of road transport and highways and state-run firms—NHAI and National Highways and Infrastructure Development Corporation Ltd (NHIDCL)—even respective state public works departments (PWDs) will be roped in for timely execution. This in turn will generate 142 million man-days of jobs, the government said.

To give a boost to the ambitious plan, all future road projects such as economic corridors and coastal roads have been brought under its aegis. The other projects under the marquee scheme include roads providing international connectivity, border roads, roads connecting economically important nodes, green field expressways and the remaining National Highways Development Project (NHDP) works under the scheme launched in 1998 by then Prime Minister Atal Bihari Vajpayee.

India needs massive funding to bankroll its new integrated infrastructure programme, which involves building roads, railways, waterways and airports.

To fund the marquee Bharatmala scheme, Rs2.09 trillion will be raised as debt from the market, while Rs1.06 trillion in private investments is being targeted through public private partnerships. In addition, Rs2.19 trillion will be provided from Central Road Fund (CRF), Toll-Operate-Maintain-Transfer (TOT) projects and toll collections of NHAI.

The government is working on raising capital by monetizing the operational road assets of NHAI that have been built by public funding, a first in the country. The government expects a private investment potential of Rs34,000 crore from the monetization of these 82 operating highways under the TOT model.

For projects not covered under the Bharatmala programme, Rs97,000 crore will be provided by the CRF and Rs59,000 crore will be provided as gross budgetary support.

Prime Minister Narendra Modi has said projects such as Sagarmala and Bharatmala will prepare a strong base for infrastructure development, enabling a person to travel across the country on a single road.

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