Financial Fillip: Generous allocations to road sector in 2017-18 state budgets

Generous allocations to road sector in 2017-18 state budgets

In recent years, states have been according high priority to the country’s infrastructure creation agenda which includes the development of an efficient, well-connected road network. Most of the states have reported double-digit growth in allocations made under their respective budgets for 2017-18. While the focus has primarily been on stepping up rural development activity, emphasis is also being laid on supporting ongoing projects financially, in addition to launching new schemes and projects. A recent development in the sector has been the allocation of dedicated funds towards road safety and road asset maintenance.

Overall outlays

As part of the respective state budgets for 2017-18, 10 states have together allocated close to Rs 575 billion to the road sector, of which Tamil Nadu has allocated the highest amount of around Rs 100 billion. In terms of shares in the budget estimates of the total capital expenditure/total capital outlay for 2017-18, Chhattisgarh, Tamil Nadu, Haryana, Madhya Pradesh and Maharashtra are the top five states, with shares ranging from 20 to 47 per cent. The remaining states – Karnataka, Rajasthan, Telangana, Kerala and Andhra Pradesh – have shares in the 12-19 per cent range.

Tamil Nadu to enhance road safety efforts

As part of its budget for 2017-18, the Tamil Nadu government has provided Rs 100.67 billion for the development of highways in the state. Further, in line with its target of two-

laning all state highways and widening all major district roads (MDRs), the last leg of 115 km of state highways and 107 km of MDRs will be taken up for widening during the year, at an estimated cost of Rs 1.6 billion. Under the Comprehensive Road Infrastructure Development Programme (CRIDP), another 1,000 km of roads will be widened and 3,000 km along with 200 bridges/culverts will be improved. A total of Rs 31 billion has been allocated for this. Other maintenance works (under the performance-based maintenance contract system) are to be extended to the Virudhunagar division in 2017-18. The state is also placing the utmost importance on road safety. It plans to take up safety works at a cost of Rs 2 billion under the CRIDP and will be allocated another Rs 1 billion from the Road Safety Fund during 2017-18.

Among major projects in the state, the Tamil Nadu Road Sector Project II is being implemented at an estimated cost of Rs 51.71 billion with financial assistance from the World Bank. In the current financial year, Rs 15.08 billion is being provided by the state government. Under the project, the upgradation of 427 km of roads and the maintenance of 597 km of highways are currently in progress, while the four-laning of 146 km of roads, at an expected outlay of Rs 14 billion (under the public-private partnership mode), will commence during 2017-18.

Further, the Rs 130 billion Chennai Peripheral Ring Road project is likely to be funded by the Japan International Cooperation Agency. Land acquisition for Section I of the proposed road (Northern Port Access Road) from Ennore port to Thatchur on National Highway (NH)-5 has already commenced and Rs 9.51 billion has been sanctioned for the project. Also, nine roads, with a total length of 141.6 km, connecting major highways have been identified for four/six-laning and improvement works, at an estimated cost of Rs 7.44 billion. Of these, works for Rs 2.32 billion will be taken up during the current fiscal year. The state will also undertake the construction of bridges at an estimated cost of Rs 2 billion with assistance from the National Bank for Agriculture and Rural Development (NABARD).

Kerala’s thrust on implementation of mega projects

During 2017-18, eight projects have been lined up for implementation in the state, at an estimated cost of Rs 5.8 billion. Funds for some crucial projects such as the Alappuzha-Kollam bypass have been provided from the Rs 15.52 billion provision made for mega projects. In addition, around Rs 3.35 billion has been earmarked for the public works department from the Rural Infrastructure Development Fund (RIDF); Rs 600 million for works under the Central Road Fund; (CRF) Rs 1 billion for MDRs; and Rs 730 million for the renovation of some major roads.

The construction of the Hill Highway, or the Malayora Highway, spanning 1,267 km, will be initiated in the current financial year with

tenders to be invited for roads in nine districts – Kasargode, Wayanad, Malappuram, Palakkad, Thrissur, Ernakulam, Idukki, Kollam and Thiruvananthapuram. The Kerala Infrastructure

Investment Fund Board will be investing Rs 35 billion in the project. Further, the board will invest Rs 65 billion for the construction of the 630 km coastal highway which is also planned to be started this fiscal year.


Karnataka to focus on road development in the capital

The Karnataka government plans to take up Phase III of the Karnataka State Highway Improvement Project through a second loan being provided by the Asian Development Bank. Under this project, around 418.5 km of core road networks will be developed, at an estimated cost of Rs 53.1 billion. Some of these are the 23.8 km Kollegal-Hanur road; the 39.8 km Chintamani-Andhra Pradesh border road; the 50.7 km Bengaluru-Magadi-NH-75 road (Nelamangala-Mangalore); the 166 km Magadi-Somwarpet road via Huliyurudurga-Nagamangala-K.R. Pet road; and the 138 km Gadag-Honnali road.

The state is also proposing the development of 150 km of roads in and around Bengaluru by Karnataka Road Development Corporation Limited at an estimated cost of Rs 14.55 billion. These roads are the Hoskote-Budigere-Mylenahalli-Devanahalli International Airport road; the Nelamangala-Madhure-Byatha road; the Anekal-Attibele-Sarjapura-Varthur-Whitefield-Hoskote road; and the Harohalli-Uruganadoddi-Karnataka Industrial Areas Development Board industrial area-Jigani-Anekal road.

Andhra Pradesh adopts holistic approach to road development

The Andhra Pradesh budget for 2017-18 has been evenly spread across segments such as state roads, rural roads, and road safety and maintenance works. For the development of rural roads, the budget has allocated a total of Rs 1.97 billion. Further, Rs 5.02 billion has been proposed for the year under the Pradhan Mantri Gram Sadak Yojana (PMGSY).

Regarding state roads, of the total 6,800 km of single-lane state highways, 1,000 km have been targeted for two-laning. As part of the Vizag-Chennai Industrial Corridor Development Programme, four-lane roads spanning 372 km will be developed. The central government has also committed funds for the development of the Amravati-Anantapur expressway.

Further, the state plans to lay greater emphasis on the maintenance of roads and a grant of Rs 11.02 billion for 2017-18 has been given (up from Rs 7.35 billion in 2016-17). In all, Rs 40.41 billion has been proposed for the state’s Transport, Roads and Building Department for 2017-18.

Maharashtra launches long-term plan for road sector

Maharashtra’s budget has also substantially increased allocations towards the road sector from about Rs 43 billion in 2016-17 to Rs 70 billion for 2017-18. Further, about 195 construction projects worth Rs 300 billion have been proposed for implementation under the hybrid annuity model. In the current fiscal year, Rs 35 billion has been allocated for the projects. The state also plans to complete the construction of 10,000 km of roads in the next two years, after which the roads will be maintained by the contractors for the next 10 years.

The state has received Rs 45.46 billion from the central government as well. With these funds, 2,211 km of roads will be improved and 252 bridges will be constructed.

Meanwhile, Rs 16.3 billion has been sanctioned for a 4,700 km work order under the Chief Minister Gram Sadak Yojana and Rs 5.7 billion has been earmarked for the PMGSY.

Haryana focuses on new projects

Haryana’s budgetary allocation for the current fiscal year leans towards new road projects. While the Delhi-Amritsar-Katra expressway was recently approved by the central government, the construction of the Kundli-Manesar-Palwal expressway has already been initiated. The central government has also entrusted the state with the four-laning of the Raimalikpur (Rajasthan border)-Narnaul-Mohindergarh-Charkhi Dadri-Bhiwani corridor in five packages. While, two packages – Kharak-Bhiwani and Bhiwani-Charkhi Dadri – have already been sanctioned an amount of Rs 5.17 billion, the remaining three packages are under sanctioning. Further, the Pinjore-Baddi-Nalagarh bypass on NH-21A and the construction of eight road overbridges have been sanctioned Rs 1.4 billion and Rs 3.46 billion, respectively, by the central government.

Rural roads get utmost priority in Rajasthan

Rajasthan’s budget has given the development of rural roads highest priority, directing nearly one-third of the budgetary allocation towards these roads (Rs 21 billion). Further, the budget has allocated Rs 5.7 billion towards externally aided projects, of which Rs 1.2 billion is for the Rajasthan Road Sector Modernisation Project and Rs 4.5 billion for the Rajasthan State Highway Development Project I. Further, a provision of Rs 6.78 billion has been made for NABARD-assisted road works under the RIDF; Rs 8 billion under the CRF; Rs 2.73 billion for the strengthening, modernisation and renovation of state highways and MDRs; Rs 5 billion under the State Road Development Fund; Rs 10 billion for the PMGSY; Rs 0.6 million for the construction of urban roads; and Rs 0.38 billion for the construction of border area roads.

Telangana to boost rural connectivity 

Telangana’s budget has also laid emphasis on the development of rural roads. These roads will connect villages to mandals, mandals to district headquarters and district headquarters to the state capital. At present, the development and widening of 8,987 km of roads is in progress, involving an expenditure of Rs 45.64 billion. Further, about 460 bridges are being constructed at an estimated cost of Rs 8.91 billion. The total allocation proposed for the road sector is Rs 50.33 billion.

Chhattisgarh to invest in bridges and city road projects

The capital outlay on roads and bridges in Chhattisgarh has been pegged at Rs 61.27 billion, which is 8.9 per cent higher than the budget estimates for 2016-17. Moreover, Rs 4.35 billion has been allocated for the construction of bridges.

The way forward

The expansive plans laid out by the state governments in their budgets have reiterated the focus on road development. While this creates ample opportunity to road sector players, concerted efforts need to be made to ensure effective project implementation. The sub-optimal utilisation of funds allocated by the state, delays in project implementation and the slow pace of road construction are some of the issues that need to be addressed. Overall, the outlook of the sector is optimistic, with most of the states giving an impetus to the sector by allocating a significant share of their total capital expenditure/outlay towards road development.