Pace of highway construction across India picks up in January

According to the Ind-Ra note, the targeted construction of 11,000km for FY2021 could be achieved, considering that the environment is conducive for construction activities in Q4FY2021.

By Shahkar Abidi

29 Jan 2021

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MoRTH executed highway projects at a rate of 28.16km/day between April 1, 2020 to January, 15, 2021, which is around 8 percent (Y-o-Y) higher.

The government had awarded 7,597km of national highways till January 15, 2021 as against the target award of 4,500km for FY2021 with the award speed of 26.2 km/day.

With infrastructure activities picking up pace, the rate of highway construction has increased to 76.3km/day between January 8-15. This is better than the Ministry of Road Transport & Highways’ overall target of constructing 60,000 km of national highways by FY2024, which would require a minimum execution pace of 33 km/day. This is as per a note prepared by India Ratings (Ind-Ra) .

MoRTH executed highway projects at a rate of 28.16km/day between April 1, 2020 to January, 15, 2021, which is around 8 percent (Y-o-Y) higher. One needs to take note that about 60 days of construction activities were lost due to the countrywide lockdown to contain the spread of Covid-19.

According to the Ind-Ra note, the targeted construction of 11,000km for FY2021 could be achieved, considering that the environment is conducive for construction activities in Q4FY2021 and if the execution rate is maintained at 37.7km/day for the remaining period. Also, the rating agency considers that the target could even be surpassed, considering that an execution rate of 35.5km/day seen in the same period in the previous fiscal, despite the lockdown in the last 10-15 days in March, 2020.

The government had awarded 7,597km of national highways till January 15, 2021 as against the target award of 4,500km for FY2021 with the award speed of 26.2 km/day. The award speed was 24.5km/day in FY2020 (FY2019: 15.0km/day) and the total length of roads awarded is 8,948km in FY2020 (FY2019: 5,493km).

Moreover, in FY2021, the government’s increased focus on road and road infrastructure not only benefitted construction companies but also acted as a good medium for economic recovery in terms of employment generation and improved demand in allied sectors such as cement, steel, and logistics.

According to Ind-Ra the slew of measures undertaken by the central government to increase the participation of EPC players in road construction contracts would further strengthen the latter’s order book in the medium term in the road sector. These measures include a reduction of the performance guarantee requirement, relaxation of eligibility criteria and norms for projects bid both on the EPC and hybrid annuity model / build-operate transfer modes.