New Delhi: In a major boost to several key road infrastructure projects, the National Highways Authority of India (NHAI) signed an MoU with National Investment and Infrastructure Fund (NIIF) to find alternative sources to fund highway projects. NIIF is a fund promoted by Government of India to give boost to the infrastructure sector in the country. The MoU is related to co-operation in formation of SPVs to execute the fund arrangement for large size road projects particularly green field projects to be executed by NHAI in future.

Speaking on the occasion, Road Transport and Highways Minister Nitin Gadkari said, NHAI is raising finances for its mega projects, and is not dependent only upon budgetary support. Several funding models were adopted in the past towards this, which have yielded good results. He hailed the MoU and expressed hope that it will provide innovative financial models including for the 24,000 km 7.5 lakh crore Bharatmala Pariyojana. The Minister exuded confidence that the road sector can contribute in a big way in achieving the Prime Minister’s dream of making India a five trillion dollar economy.

Gen (Retd) V.K. Singh, MOS Road, Transport and Highways welcomed the coming together of two big entities—NHAI and NIIF, and expressed satisfaction at the pace of development in the country’s infrastructure sector.

This arrangement of innovative alternate source of funding is being looked into by NHAI to attract international investors and fund houses who are willing to invest in road projects in India but not very keen to take risk related to the project execution. This arrangement is expected to bring huge amount of investment at economical rate for highway development in India and reduce the stress of borrowing on NHAI balance sheet also.

The development assumes significance with highway construction and expansion in India crossing 10,000 kms during 2018-19, which translated to 30 kms a day during the fiscal, and more than doubled from 12 kms a day during 2014-15.

The total national highway network for India stands at 1.14 lakh km as on 31 March 2017, which accounts for around 2 % of the total road length of 58.98 lakh km. Rural roads constitute the maximum share—around 71 %—according to the Economic Survey 2019 data.

Investments in the road sector increased thrice in the last five years to Rs 1.58 lakh crore in 2018-19. The investments have been financed from budgetary support, internal and extra-budgetary resources (IEBR) and private sector. While budgetary support accounted for 48 % of the investments in 2018-19, private investments accounted for 14 %.

The Economic Survey 2019 report attributed the increase in the pace of road construction to pro-active policies to respond to major challenges faced by the sector. These include more power to authorities in terms of approval limits, putting in place mechanisms for inter-ministerial coordination, introducing innovative project financing, and streamlining land acquisition processes.