Business Today

Highways to prosperity

If Highways Minister Kamal Nath walks the talk of building 20 km of road per day, he will create economic value and improve the lot of the aam aadmi.

K.R. Balasubramanyam        Print Edition: February 7, 2010

To US President Franklin D. Roosevelt goes the credit of creating what has become the backbone of America in the late '30s—its interstate highway system. It was in 1999 that the NDA government at the Centre realised that India needs to move from dirt paths to expressways if it had to hasten economic progress. Grand projects like the Golden Quadrilateral (which would link the country's four main metros with four- and six-lane expressways) and the North-South and East-West Corridors were flagged off. Progress has been made but it has been slow — today 98 per cent of the GQ and 60 per cent of the corridors are ready.

Now Kamal Nath, Highways Minister in the ruling UPA government, wants to up the tempo. He wants to build 20 km of roads a day in the next 50 months, in the process adding 35,000 km to the nation's highway map. If he succeeds, the UPA government would have done more in one year than what the NDA regime could achieve in five (in the NDA period, 3,400 km of roads were added). Another perspective: Till the 9th Plan (which ended in 2002), India was building about 100 km of highways a year. Kamal Nath wants to cover that ground in five days!

The progress, so far doesn't match the promise, although Kamal Nath has stepped up the pace — from 2 km a day in his first year to about 8 km a day now. The government's programme requires an investment of Rs 3.7 lakh crore, out of which it hopes to raise about Rs 1.7 lakh crore through public-private partnerships (PPPs). The estimates are constantly inching up, from $70 billion (Rs 3.22 lakh crore) a year ago to $80 billion (Rs 3.7 lakh crore) now, for projects targeted over the next 4-5 years.

Currently, work is underway to build 6,500 km. Officials of the National Highways Authority of India (NHAI) estimate the average cost of building fourlane highways at Rs 8-9 crore per km and six-lane highways at around Rs 14 crore per km, inclusive of land costs.

One of the stumbling blocks for speedy highway construction has been land acquisition—most projects in Kerala, Tamil Nadu and Rajasthan are the worst victims of this. However, there have been isolated cases of people giving up land, only to prosper in the medium term. Two years ago, in the historic town of Bidar on the Karnataka-Andhra Pradesh border, people gave away 80 acres to the Bidar district administration, free of cost, to widen roads and build new ones. The roads have come up, and the asking rate for their land, valued at Rs 2.5 lakh an acre, has shot up 10-15 times.

What happened in Bidar has to happen at a macro level if Kamal Nath's ambition has to be realised. That everybody, right from businessmen to the aam aadmi, will benefit has to be driven home. After all, highway development is an economic stimulus that brings industry and business closer to the local community. A World Bank study has assessed that a rupee invested in the highway sector will yield Rs 7 in economic value. Good roads, experts say, will bring down inflation, and thus the cost of living.

The jobs created spawn prosperity and slow urban migration. On an average, 45 labourers are employed for every km of road taken up for development, with each paid between Rs 250 and Rs 500 a day. After a project's completion, developers will need at least five persons to maintain a km of road. There's also the saving of time and money. A trip between Trichy and Chennai in Tamil Nadu used to take 8.5 hours when it had a two-lane highway.

Vehicles can now do the 350 km stretch in 5.5 hours. Fuel consumption can increase by up to 56 per cent if the speed of a truck falls from 45 to 20 kmph. Better roads will cut the country's fuel bills by 20 per cent. Losses from congestion and poor roads alone are as high as Rs 30,000 crore, according to Planning Commission pundits.

Another US President, John F. Kennedy, famously said: "It's not Americans' wealth that built roads but roads that built Americans' wealth." Can Kamal Nath put India on the same road?

The Macro Effect

  • Losses from congestion and poor roads alone are as high as Rs 30,000 crore, according to Planning Commission.
  • Road improvement will save fuel bill of the country by 20 per cent.
  • Total economic return on cost of road improvement will be as high as 50-60 per cent in one year alone.
  • A World Bank study has assessed that a rupee invested in the highway sector will yield Rs 7 in economic value.

What Goes into 1 km of a Four-lane Road

  • Rs 8-9 crore (including cost of land).
  • Rs 4.5-5 crore (without land cost).
  • 60 tonnes of bitumen (Price: Rs 30,200 per tonne).
  • 45 labourers for building and five workers for maintenance after completion.

Source: NHAI, World Bank, media reports

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