Road construction projects that had halted during the first quarter of the current financial year (Q1FY25) due to the imposition of the election model code of conduct, have picked up significantly, according to a research report by Nuvama. The report noted a significant uptick in road construction during July 2024, with a combined total road construction of 600 kilometre, representing a 43 per cent year-on-year (YoY) surge.
"Road construction in July 2024 at the combined level was 600 km, surging 43 per cent YoY; of this, the National Highways Authority of India (NHAI constructed 291km. Year-to-FY25 construction stands at around 2,534 km at a pace of 20.8 km per day, of which NHAI constructed 1,135 km," said the report.
Due to the imposition of a model code of conduct because of general elections, many road projects could not be awarded during the first quarter of FY25. However, awarding of road projects has picked up since then, with 468 kilometre of road projects being awarded in July 2024. The report also added that for the current financial year (FY25), road construction stands at approximately 2,534 kilometre as of July, reflecting a 5 per cent year-on-year decline and an average construction pace of 20.8 kilometre per day.
The NHAI contribution to this figure is 1,135 kilometre. In comparison, FY24 saw total road construction of 12,349 kilometre at a pace of 33.7 kilometre per day, with NHAI constructing 6,644 kilometre of roads.
NHAI's contribution in road construction will drop further as the government is also focusing on reducing the debts of NHAI, which have surged to over Rs 3.35 lakh crore. The government intends to reduce it to Rs 1 lakh crore.
"In recent years, NHAI's debt has been a point of concern, and the current strategy focuses on stabilising its financial situation rather than increasing its borrowing capacity. By maintaining a minimal budgetary outlay and avoiding new debt, the government aims to manage the NHAI's resources more prudently." said the report.
NHAI is seeing limited financial growth in its budgetary allocations, with an increase of just around 1 per cent for the current fiscal year 2025. According to the report, the Internal and Extra Budgetary Resources (IEBR) projection for NHAI remains at zero for FY25, signalling the government's cautious approach to managing the authority's finances. This conservative stance reflects the government's clear intention to curb further debt accumulation for the NHAI. (ANI)
