Status Quo of the Road Projects in India

Was browsing through Economic Times and found two really good articles which I think would be relevant to what we have covered in the class on “Transportation Infrastructure in India”.

The first article states the present Road Projects ongoing in Bihar and the other article outlines an overview of the current private sector participation in the domain.

I would briefly summarize what I read which I think would give a good picture of the ongoing road projects in the country.

Of course, thanks to group 1 and Prof. Ashwin Mahalingam for easing the understanding and now I think we can relate to the topic and understand the jargon even better.

One story which I think many of us know and must know is that of Satyendra Dubey an IIT-Kanpur Civil Engineering student who was working with National Highway Authorities Of India and was assigned the famous Golden Quadrilateral Project. While being posted at Koderma in Jharkand he exposed the corruption and other inadequate practices in the section by writing a letter directly to the prime minister’s office. More so, he clearly stated even the names of the companies involved. Thus to protect himself he asked for anonymity but no-one actually gave any sort of heed for his anonymity request and circulated the letter among themselves.

What do you think might have really happened after this?

He was murdered an year later at Gaya, Bihar. I respect and ofcourse everyone respects for what he had done but no one actually dares to go against the authorities involved. Well, you may ask what happened to the murderers? One of the three accused in the case escaped from police custody and the rest is history. Its all crony capitalism and I believe corporations are even more grievous and selfish than mafias.

I think India at this stage where we are hardly 65years post-independence is going through a very high amount of corruption, fraud and malpractices. Well we must not forget that all developed countries went through such a phase including US but some major reforms and policy changes took place after that which actually made them what they are today. I think it’s high time we also raise our voices against corruption and reject strongly the fact that someone’s life in India is considered so cheap. A little out of the way but I think “Jan Lokpal Bill” is a onetime opportunity which we all have and hence we all must support if we agree to it. To support Lokpal or not is ofcourse subjective and debatable.

The Satyendra Dubey story took place like around 8 years back but one good thing is that the situation in terms of “development” in Bihar now has turned around. Two of the projects are toll road projects in which the operator needs to be assured of returns by collecting tolls. And now we can see this spirit and confidence among corporations of taking up such projects. Bihar has become one of the first states in the country to use mobile tech for keeping a track on the progress of the projects.

The private sector participation is being seen not only in Bihar but also elsewhere in the country. The private sector is bidding aggressively for projects even which government is financially skeptical about. You may wonder what happened suddenly? Well, the changes in the bidding norms has led to an increase in participation of private players. Some even say it is because of the few offerings from the government. GMR infra won a 5700 crore national highway project connecting Rajasthan and Ahemadabad. Eight similar offer have been received by NHAI recently.

As discussed in class, the government offers upto 40% of the project cost viability gap funding to support projects in areas where returns may not be that fruitful.

So the summary of some of the key-points could be as follows:

1. 1. Bidders are now ready to pay a premium for the road projects
2. 2. Roads have put out a good policy helping it attract more and more investments
3. 3. Road traffic is expected to grow at 7-8% growth.

I have purposefully skipped the details of the project because I think the learnings behind the project are more important than the project itself.

Mayur