The road sector is suffering from immobility! Surprised?
The road sector is suffering from immobility! Surprised? Let us say that it has landed in a standstill spot. Its ability to construct beyond 40 km per day is probably 15% as the rate at which we have seen the construction get executed has always been between 25 km per day and 30 km per day. (That our targets set by the government would not be achieved was already forecast in this column way back in December 2022. See HERE ) During past nine years since 2014 despite, Union Minister’s Nitin Gadkari’s best efforts and he is quite a dynamic leader, we have reached the highest record of having executed 37 km per day. Now Gadkari has tried all: sector friendly policies, easing of finance restrictions, land acquisition budgets etc and yet if this is where we are then we may need PM Gati Shakti to step in to drive the pace further. However, we are quite into the forthcoming general elections and therefore ability of this sector to scale will be tempered further.
What does road construction have to do with elections? Well, for one it has led the voters to vote for development. Yes, roads are the first step towards development. Once a road is constructed, the rest of the government services and facilities are able to reach the isolated areas. The pace of construction also accelerates during the year of election as it does signify change for the better for those receiving the facility. However, it has also been observed that road construction often experiences either a drop in the pace of construction or a flattening in the year following an election. For instance, in 2014, the total road length constructed was 4,260 kms, and the subsequent year saw a marginal increase to 4,410 kms. Similarly, during the elections in 2019, the constructed road length spiked to 10,855 kms, but then dropped to 10,237 kms in the year that followed.
The target for the upcoming year, 2023-24, has been set at 13,800 kms which will be a 30% improvement over the previous year, and which is slightly higher than the 13,327 kms constructed in FY 2020-21. Despite past instances of missed targets, there is optimism that the current financial year, being an election year, will achieve the ambitious goal of constructing 37 kms of road per day.
However, based on the historical track record, it is likely that the following year, 2024-25, will witness a flattening of this pace. The 13th India Roads Conference is scheduled on 12th October in Delhi. The conference is focused on the business of road construction. Financing, asset monetisation, projects management, technology and trends will be discussed with CEOs of road construction companies, road developers, road asset monetisation companies, technology companies and other specialists.
Click below and reserve your seats!
www.IndiaRoadsConference.com or call Deepali on 82919 95574