Since rural road development is very slow in process, most of the large roads developers have not shown interest. However, Goutham Reddy, Chairman, Ramky Infrastructure, talking to Sumantra Das says government initiative or incentive (tax benefit) can really push big players to go into rural roads development.
Why are large players not interested in Pradhan Mantri Gram Sadak Yojana (PMGSY)? There are many reasons like most of these projects are actually small in nature, they are small in size with small value contracts. It is not like a large highway project where you will find the scale of business. Besides, since it is very slow in process, most of the large roads developers have not shown interest.
Given the present slowdown in highway projects, will some developers move towards rural road segment? Yes, currently there is a lull period in highway projects. Developers are moving away from BOT projects to EPC, especially when the liquidity has also become a major concern in the market. I think given these circumstances, people will certainly look at the rural road projects now, but ideally they would still look at the bulking the four or five roads as packages, so that they can get a larger chunk of the contract. However, I believe going for rural roads will not be a viable option because you get your existing work and equipment engaged. It is at least become opportunity in the situation.
Will players like Ramky go for it if government provides some incentives? Yes. Government initiative or incentive (tax benefit) can really push players like us to go into rural roads development.
How can viability be enhanced in rural road projects? Most of these projects are anyway on EPC basis. So, I do not think we are discussing any viability or viability gap. It is just that because of the length of each of this road is quite small that the value of the contracts is also small. Thus, only small and medium contractors are showing interest for such projects. However, if the package of each mandal or a taluka comes as a large road contract then you can expect a better response.
Do you find any government initiative to augment private participation in rural road sector to happen? As far as I know not in the PMGSY.
According to you how can the quality of rural road be increased? Will policy initiative help anyway? No, I think policy is already there. It is just that the privatisation will naturally help enhance the quality because through privatisation you will ensure responsibility for quality of road few years and therefore quality will enhance.
Will PMGSY be able to serve the purpose of rural connectivity or only increase the burden? No, it will certainly improve the connectivity and rural quality of life. It is a strong programme which needs to be encouraged. However, I still think quite a few villages in the country are not connected well, so I strongly believe in order to continue connectivity robust work of this programme must continue.