Jan 11, 1999

The PMO thinks the grandiose project will kickstart the economy, create jobs and enable phenomenal savings in fuel. It only needs to find the money for it.

By Shefali Rekhi

Which comes first -- the wide and long roads or the trucks and cars that move on them, to herald economic growth? US president John F. Kennedy thought roads came first: "It's not wealth that built our roads but the roads that built the wealth." Indian leaders surely thought the other way round, judging from the dilapidated state of even the high-traffic corridors of national highways. The BJP-led Government has decided to fix the paradox by giving roads the first place.

That prompted Prime Minister Atal Bihari Vajpayee to lay the foundation stone in Bangalore for one of the biggest road projects ever undertaken in the country -- the Rs 50,000-crore National Highways Road Development (NHRD) project to connect Kashmir to Kanyakumari and Silchar to Porbandar. By March-end, earth-movers and road-rollers are likely to be deployed at 20 stretches. That will be a prelude to widening, or building from scratch, what is designed as India's first modern highway network. "These highways will accelerate India's economic growth. India needs to implement these express highway projects at express speed," the prime minister said at a seminar on express highways last month. The remark earned Vajpayee a standing ovation.

However, the ambitious road-building plan came almost accidentally. In September last year, while groping for a way to pump-prime the sagging economy, Vajpayee thought up a plan to do it through construction of roads. Thus came the plan to connect the four corners of the country through north-south and east-west corridors. In early October, about a fortnight before the announcement came, the PMO shot off a note to the Ministry of Surface Transport (MOST) asking for an estimate of the cost of six-laning the proposed road network and suggestions for the locations at which work could commence in the current fiscal.

That was a quantum jump from the plan already on the anvil. Till then, the National Highways Authority of India (NHAI), the key agency for all highway development work, had prioritised a more modest project -- that of four-laning the "golden quadrilateral" connecting the four metros of Delhi, Mumbai, Chennai and Calcutta. After receiving the PMO's request, most linked up, on paper at least, Kashmir with Kanyakumari and Silchar with Porbandar. The estimated cost of four-laning worked out to Rs 28,000 crore. If the roads were to be six-lane, the cost would have been Rs 49,000 crore. When Vajpayee made the announcement at the annual session of the Federation of Indian Chambers of Commerce and Industry (FICCI) on October 24, it was discovered that the cost estimate did not match the project size.

To iron out these incongruities, a task force was commissioned under the chairmanship of Planning Commission Deputy Chairman Jaswant Singh. At the task force's second meeting, it was clear that the project couldn't be financed if it remained as grandiose as Vajpayee desired. The task force therefore decided to merge the NHAI's quadrilateral plan with that of the prime minister's, making it a 12,000-km project. The golden quadrilateral project stretches to 6,000 km, with 1,000 km already completed. In the task force project, six-laning has been dropped for the moment, except for a few select stretches. Final cost estimate: Rs 50,000 crore.

The task force also decided that priority would be given to the quadrilateral, to be followed by work on the spurs linking the metros with the outermost destinations of the corridors and finally the "spine" connecting Delhi, Bhopal, Hyderabad and Bangalore. "We shall take up the high density corridors first," says R. Vasudevan, secretary, MOST. Thus, what began early in 1997 as a project to connect the three metros to the national capital has now become a gigantic road network connecting all major trading, production and export centres. The Vajpayee Government, despite being prone to teetering and tying itself up in knots on policy issues, at least cannot be accused of thinking small.

The task force is meeting this week to address the crucial issue of finding the cash to implement the project. Since road-building is a long-term project, its fund requirements keep varying with the year. Its average annual cost is therefore expressed by discounting the future escalation in costs. Following this method, the average annual cost of the project works out to around Rs 5,000 crore over seven to 10 years. About Rs 2,000 crore are expected to come from the plan account and Rs 700-800 crore from the Re 1 cess on petrol already in force. For the balance, the Government is planning to introduce a cess of 50 p-Re 1 on every litre of diesel. Also planned are a one-time tax on new vehicles and apportioning of a part of the excise revenue for roads. Aware that the cess on diesel is a political dynamite, the task force is now trying to get state governments to impose a new tax to mop up Rs 300-400 crore. A small amount is also to flow in through toll charges on some of the upcoming projects.

Funding apart, the bigger roadblocks will be bureaucratic hassles and the capability of the industry to execute the project. Till recently, the Public Works Department (PWD) contracted jobs to the private sector. But the tendering process was vitiated by corruption and red tape. The Government hopes to cut delays by giving the NHAI the mandate to execute the project through a standardised contracting manual. But it may not be easy because NHAI will still need clearances from other state agencies to remove utilities. Besides, there are the innumerable stays that are allowed by the legal system at every stage. Contractors and equipment are also in short supply. They can handle only 100-150 km of roads each year. But to achieve the dream project, roughly 1,200 km of new roads need to be constructed.

The Government is hoping to take care of this problem by upgrading technology. Thin surfaces will go, yielding place to thick bitumen layers or cement. The NHRD roads will also use computerised cement-mixing plants, or batching machines, and giant paver machines (for speedily laying bitumen mix on the dressed surface) on a large scale. It will cut back on project time.

However, there is no doubt that the roads sector is most eligible to kickstart the economy. In the First Five-Year Plan, 1.4 per cent of the total plan investment was dedicated to roads. In the Eighth Plan, it was down to a mere 0.57 per cent. While the length of national highways doubled from 19,811 km in 1951 to 38,500 km in 1996, the load of freight and passenger traffic grew 60 and 65 times respectively.

The Government has rightly concluded that the responsibility for building roads should primarily be borne by the state. And what is more important, the future of a "road-networked" India does not lie in the fashionable expressways but in the growth of efficient highways. A kilometre of expressway costs over Rs 10 crore to build whereas a kilometre of highway costs Rs 4 crore.

Further, to attract private capital for a project with as long a lead time as road construction is easier said than done. From the beginning of the '90s, the state governments have tried to involve the private sector for developing small stretches of bypasses and bridges. But there is very little evidence of these projects having matured. A toll bridge project at Noida in Uttar Pradesh has taken nine years for financial closure. Only three joint-sector projects are now in operation out of a dozen handed out to the private sector. "Making the private road projects bankable is a very complex process," says Pradeep Singh, senior vice-president of Infrastructure, Leasing and Financial Services. "The whole process can take years because in some cases you have to get the states to change their laws as well."

However, with the push for state financing now coming from the PMO, the new project may get over the resource hump. At least it cannot get checkmated by objections from within the Government, as has been the fate of most road development projects in the recent past. Nonetheless, the only resistance that the project is likely to face is political, as the proposed cess on diesel will certainly draw angry protests from the farm lobby. After losing the "onion poll" in three states, the ruling BJP may be unwilling to gamble on a hike in the prices of farm electricity and fertilisers, particularly when prospects of mid-term general elections loom in the horizon. If Vajpayee's grand plan fails to take off now, it may well be the end of the road for the project.

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