The Finance Ministry is not in favour of using state grants to develop 20,000 km of roads in the 12th Five-Year Plan. The Ministry wants the road department to contract projects on build-operate-transfer (BOT) basis.
If effected, the move could help the government save expenditure of some Rs 70,000 crore. The Finance Ministry is under pressure to contain expenses, especially after tax collections suffered following the visible slowdown in economic growth. The 12th Plan, which gets underway in April, proposes 20,000 km of roads to be broadened to two lanes through engineering, procurement and construction (EPC) contracts. At an average cost of Rs 3-3.5 crore per km, the total outlay for this would be in excess of Rs 70,000 crore.
In the last week of December, the Finance Ministry had a rethink and suggested that the highways ministry prefer the BOT model, where the private developer has to put up the capital to develop a project and also bear the risk.
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