Modi 3.0: What’s on Gadkari, Vaishnaw’s agenda?

Cabinet ministers Nitin Gadkari and Ashwani Vaishnaw retaining their highways and railways portfolios respectively is seen as the NDA’s government’s clear intention to continue its focus on building infrastructure under ‘Vision 2047’.

In their previous terms, both ministers ensured rapid growth and took policy decisions for private players to invest in road and railways sectors. Gadkari, now in his third term as Minister of Road, Transport and Highway (MoRTH), has ensured a 60% jump in highway construction since 2014.

The length of national highways has increased from 91,287 km in 2014 to 1,46,145 km by the end of 2023. The stretch of four-lane and higher national highways has expanded from 18,387 km in 2014 to 46,179 km.

In his third term, Gadkari aims to work on the ‘Vision 2047’ roadmap for the construction of 50,000 km of high-speed access control highway corridors on the lines of those available in developed countries. The ministry plans to award 3,000 km of national highways in the first 100 days.

The biggest task on hand for the 67-year-old MP from Nagpur is to increase private investment in the road sector. As of now, a majority of highway projects are awarded under engineering, procurement and construction (EPC) with 100% funding from the government. In the last year, there have been some efforts to streamline policy-related issues to attract private players to put their capital in the road sector.

The rating agencies do expect increased private player interests in the highways sector in FY25 due to the revised model concession agreement.  

“The revamped BOT (build, operate, and transfer) model has made it more favourable for private participation. It now has more transparency towards traffic volume which augurs well for the developers. Introduction of buyback provision in case of additional tollway & competing road reduces traffic risk for the developer,” Aniket Dani, Director, CRISIL Market Intelligence and Analytics, told Business Today.

There is a large pipeline of projects under BOT and TOT (toll, operate, and transfer) as part of asset monetisation to raise funds for greenfield highway projects. According to the industry, together (BOT & TOT), the awards will likely be Rs 3.5 lakh crore in the next 12-18 months.  

Reducing the National Highways Authority of India (NHAI) Rs 3.4-lakh crore debt is another critical area of focus for Gadkari and a plan is already part of the 100-day agenda.  

The ministry has set a target of 13,000 km of highway construction for FY25 and bidding is expected to pick up in the second quarter post-budget. The ministry is also expected to roll out a cashless treatment facility for road accident victims on national highways.

It will be interesting to see if this coalition government can tread through reforms related to land acquisition as that continues to be a challenge for construction players in the industry.

“The union government faces difficulties in passing substantial economic reforms due to varied political agendas, and political uncertainties that delay critical projects. To ensure equitable infrastructure investments, particularly under the poverty regions, remains a daunting task,” Sanjay Sinha, Founder and Managing Director, Chaitanya Projects Consultancy told BT.  

Railways

Vaishnaw, who will be juggling three different ministries, has already given instructions to the Railway Board to keep the focus on modernisation of Indian Railways with the introduction of more Vande Bharat trains, capacity augmentation of tracks, revamping old bogies with modern amenities and increasing railway freight share.    

Indian Railways, known as the lifeline of the country, carried around 585 crore passengers in FY23 and has seen a massive push of modernisation under the Modi government, with the introduction of Vande Bharat, a semi-high speed train, in several sectors across the country.

Railways is also likely to see more contracts for Vande Bharat and other track capacity augmentation in the coming months. The government plans to take the number of Vande Bharat from around 90 now to 800 by 2030. However, experts say that the number could be achieved earlier, keeping in mind that several state and private production units are upgrading their facilities for mass production of these modernised coaches.

The focus will be non-AC segment with Vande Bharat sleeper likely to be introduced this year. The government has also announced the introduction of 50 Amrit Bharat trains in financial year 2024-25, which are designed to enhance passenger experience on non-Vande Bharat trains.

A pipeline for the production of bogies and ancillaries has led to a huge jump in stocks of private players in the railway segment like Titagarh Rail Systems and Taxmaco Rail and Engineering Ltd. Experts feel that other railway stocks like IRCTC, IRFC and RVNL will continue to perform in near future, riding on the push for rail infrastructure under the NDA government.