By this time next year, we will have a new government in place. Whether that is the re-election of the National Democratic Alliance (NDA), the United Progressive Alliance (UPA) or a third front similar to the short-lived governments of Mr HD Deve Gowda and Mr IK Gujral, is anyone’s guess. Whatever the outcome, millions of opinions will be formed and re-formed in the build-up as the present government’s term draws to a close.
Partisan plaudits and criticism aside, there is one ministry, in these last four years, that has certainly earned my admiration – the Ministry of Road, Transport and Highways.
In India, people have moved from having no roads at all to dirt roads to gravel roads to paved roads. The connectivity a road provides extends to not just economic benefits but social connectivity. A person in Jaipur need only use the roads to reach Delhi. This social connectivity is increased when the medium is not restricted to land but expanded to water.
More Roads, Safer Roads
Since roads are under the domain of states, the Centre is entrusted with National Highways; these constitute about 2.2% of all roads in the country despite handling around 40% of the traffic. The roads were constructed in 2016–17 at an impressive rate of 22.5 km per day. This totaled to 8,231 km and almost twice of that – 16,271 km – was awarded for construction. Comparing the amount of road constructed against the previous administration gives an idea of how rejuvenated this Ministry’s administration has been. Between 2011-14 – 15,005 km was constructed as opposed to 18,702 in 2014-17 and only 15,330 km was awarded as opposed to 34,018 km in 2014-17.
I believe an aggressive approach towards roads and infrastructure, in general, will boost employment, revive the investment cycle and generate a higher standard of living for Indians; I couldn’t be happier with the amount of roads constructed. I am reminded of Mr Atal Bihari Vajpayee’s government which also had a heavy emphasis on infrastructure through the Golden Quadrilateral to connect the 4 major cities of India – Delhi, Mumbai, Kolkata, Chennai as well as the National Highways Development Project.
Even in terms of road safety, which has taken a significant toll on our country with an unacceptable number of deaths, this government has amended the current Motor Vehicles Act 1988 with the much more relevant Motor Vehicles (Amendment) Bill 2016. With National Highways accruing 28% of all accidents, despite being just about 2% of all roads, the intervention of the Centre was more than required.
This bill, which has been passed by the Lok Sabha, increases the penalty of drunk driving, establishes a National Road Safety Board where State and Central representatives shall advise the governments on road standards, and even mandating contractors to maintain safety design characteristics, etc. I personally see this as a better bill now than what it was when it was introduced. The Minister himself, Mr Gadkari, has taken the right path in letting this bill take its time by being scrutinised by a Standing Committee. This is a perfect example of how bills evolve to become better due to the Parliamentary procedure.
The Brasilia Declaration requires reduction of road accidents by 50% by 2020. This has been signed by our country. The National Road Safety Policy has been approved to achieve this. Apart from the usual promises of promoting awareness, encouraging safer road infrastructure etc, even setting up a body here like the National Road Safety Council will not be enough. The best decision taken by this government was involving the state governments. A group of state transport ministers have been constituted to examine best practices related to road safety. This group, a subsidiary to the Council, not only promotes federalism but recognises that roads are a coincident issue. This is the way to tackle a problem. You cannot have an outdated approach to road safety as roads are built by both states and the Centre. It is only natural that a subsequent solution would involve the states too.
During the UPA’s rule, bridges in the National Highways were built with disparity between each other. The UPA did not take into account that bridges were built with three lanes to avoid costly reconstruction. Sometimes bridges were built with two lanes when the highway was a six-laner. Simply put – wider lanes generally reduce traffics as it has distinct spaces in the same direction for vehicles, but, when that same traffic comes into a narrower lane i.e. two lanes, then, the chances of accidents or long jams. To solve this, four-laning of National Highways is underway and the Ministry has identified about 5,575 km for their upgradations to four-lanes or six-lanes. Clearly, ameliorating the UPA-era mistakes is better late than never.
Involving A New Medium
National waterways, not rivers, can be legislated by the Parliament. The Ministry has declared more than 100 inland waters as national waterways so that they can be developed. The capabilities and resources of the Centre are a cut above all of the state Governments combined. Developing and linking national waterways is not just important for linking rivers, but, to facilitate trade via water. With the upcoming Chabahar Port, India will need all its trading capabilities in the 4,382 km length which has, up till now, been declared National Waterways, to be functioning optimally so that long distances can be covered. I am positive that this effort to work on National Waterways will avail a strategic opportunity.
Money for levelling, linking and developing these waterways is already underway to be sanctioned. The previous NDA Government passed the Central Road Fund Act (2000) to impose a cess on petrol and diesel. The money collected is transferred to the NHAI which then gives it to state Governments for development of state and city roads. The present NDA Government amended this Act. The amended act seeks to allocate a share of this cess towards the development of inland waterways. 2.5% goes to fund national waterways.
An Ostensibly Better Model
Traditionally, with previous administrations, the tender process was either operationally risky for private contractors or financially risky. Even with online tenders, private players were unsure if they wanted to do business with the government. The models before was Build-Operate-Transfer (BOT) Toll, Build-Operate-Transfer (BOT) Annuity or Engineering Procurement Construction (EPC).
With BOT Toll, the roads they built were theirs to recover their investment via toll which essentially amounted to the privatisation of highways, which, either got misused or did not get enough traffic. The models of EPC and BOT Annuity burnt a financial hole in the Government’s pocket. Stalled projects have been piling up and increased the problem of NPAs (Non-Performing Assets).
The Ministry came out with an innovative model for developing highways i.e. the Hybrid Annuity Model (HAM). In this model, there is a mixture of existing models i.e. taking the best from both worlds and applying it to allay the concerns of private players. In this model, the Government puts in 40% of the money and the contractor has to come up with the remaining 60%. Also, contractors recover their investment through annuity payments by the Government. All regulatory clearances risk, compensation risk, commercial risk and traffic risk is borne by the government, so the risk for the private sector is minimal. This means it is a win-win situation for both the Government and the contractor. No proverbial financial hole for the Government and no traffic risk for contractors. The Economic Survey 2017–18, which gets quite critical of the Government, mentioned that stalled projects have been reduced due to implementing HAM, inter-alia.
Debt Issue?
The Ministry of Road, Transport and Highways has done a commendable job. Some believe that the new scheme ‘Bharatmala Pariyojana’ which wants to build 9,000 km of economic corridors, might divert the traffic, which under the BOT (Toll) Model might mean more debt issues for private companies. As economic corridors increase, the drivers might not use the existing roads. This is a fallacious argument as there is a well-known theory of induced demand. The theory goes – the more roads you build, the equivalent amount of drivers will be generated.
That is not to say that drivers will appear magically, but since roads are virtually free, discounting petrol/diesel and toll, people would want to use it more and more as travelling is a desired human activity. Even if you assume that the HAM Model, which is now prevalent, is not used, there has been considerable research to show that building more roads does not reduce traffic congestion. It certainly will not in a country like India where there has been an exponential rise in the number of vehicles.
Credit where credit is due – the Ministry of Road, Transport and Highways has done remarkable work under Mr Gadkari. These last four years have been steady for the transport sector. This is one of the best run ministries by someone who has experience in running businesses. I applaud the efforts and hope that the next government, whether it has the same Minister or not, builds on this progress.