Bharatmala Project: MoRTH Seeks CCEA Approval For Revised Cost Estimate Of Rs 10.6 Trillion

In a recent development, the Ministry of Road Transport and Highways (MoRTH) has taken a significant step by approaching the Cabinet Committee of Economic Affairs (CCEA) to seek approval for a revised cost estimate for the ambitious Bharatmala Project. 

The flagship project's cost has surged to Rs 10.6 trillion from its initial approval estimate of Rs 5.35 trillion in October 2017, citing reasons such as increased land acquisition expenses and inflated input costs.

The primary factor contributing to the drastic cost escalation is the higher expense associated with land acquisition, accounting for nearly 35 per cent of the total construction cost of highways. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act of 2015 has played a substantial role in driving up the costs of land acquisition.

The delay in obtaining necessary approvals has resulted in the postponement of awarding new projects, significantly lagging behind the annual targets. The Department of Expenditure, in a recent order, has stipulated that no new works or contracts under the Bharatmala Project will be approved until the CCEA grants approval for the revised costs. The order also caps expenditure at 20 per cent above the initially approved cabinet estimates, preventing the creation of fresh liabilities for land acquisition and pre-construction activities under the project.

This order has left agencies involved in highway construction seeking clarity on the fate of tenders for new awards that are currently at various stages of bidding. The total length of highways awarded from April to October has already witnessed a decline, dropping to 2595 km from over 5000 km in the corresponding period last year. Despite a full-year target of awarding new highway projects set at 12,500 km, the current situation raises concerns about meeting this objective.

Earlier communications from MoRTH to the cabinet expressed apprehensions about the slowing pace of awards, emphasising the need for prompt decisions on the approval of the revised Bharatmala Phase-I or an alternative program. The ministry warned that a shortfall in awards this year could adversely impact construction progress in 2024-25.

Highway construction remains a crucial priority for the government as it actively promotes public spending to support economic growth. This fiscal year, MoRTH has been allocated Rs 2.58 trillion for capital expenditure, marking a 25 per cent increase from last year's revised estimates. As the fate of the Bharatmala Project hangs in the balance, the government faces critical decisions regarding project costs, approvals, and the overall trajectory of this pivotal infrastructure initiative.