The impact of the measures initiated by the Ministry of Road Transport and Highways and the National Highways Authority of India to revive the ailing road sector is likely to be seen only after a period of six to eight months, according to highway developers.

In a bid to speed up execution of national highway projects and provide the much needed momentum to the road sector, the MoRTH and NHAI have recently taken several steps. These include streamlining the process of land acquisition and other statutory clearances, securitizing road sector loans, revamping the dispute resolution mechanism and improving coordination with other ministries.

In addition to the various measures initiated by MoRTH and NHAI, the Ministry of Environment and Forests on its part is also attempting to provide some relief to the road sector. It has de-linked the grant of environment clearance from forest clearance for linear projects and the strengthening and widening of national highways is being treated differently from new projects.

In order to boost lending to the road sector, the Reserve Bank of India has advised scheduled commercial banks to treat road sector debt as secured within the limits of 90 percent of debt due. To help highway developers cope with the financial stress being experienced in Public Private Partnership projects awarded in the Build-Operate-Transfer mode, the government has allowed harmonious substitution of concessionaires and rescheduling of premium payment.

Though cautiously optimistic, highway developers do not expect the measures initiated for revival of the road sector to provide any immediate relief.

“The policy paralysis in the previous government had considerably slowed down the road sector, particularly during the last three years,” M. Murali, Director General of National Highways Builders Federation, told Projectmonitor.

“The approach of the present government towards the sector is no doubt positive but the effectiveness of the measures it has initiated for revival will be known only after six to eight months,” he added.

Murali pointed out that lack of equity and delays in grant of statutory clearances remained major hurdles for the sector.

“At present, financing is the biggest challenge for the sector. Inspite of the various measures initiated by the government to boost the sector, banks may still be reluctant to lend for highway projects because of their past experiences. As far as the issue of clearances is concerned, it can be resolved only with the adoption of a single window clearance system. In the absence of such a system, there needs to be better coordination between the various ministries involved,” he added.

The MoRTH has decided to implement national highway projects in the Engineering, Procurement and Construction mode till the time the road sector gathers momentum and the issues plaguing the PPP model are addressed.

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