By Shailesh Agarwal, Partner – Risk Consulting, EY India
As India approaches its centenary of independence, India’s Vision 2047 aims to develop world-class infrastructure across rural and urban areas. This transformative journey gained significant momentum with the Union Budget 2020. Year on year, this momentum has increased and gained the government’s commitment. Allocation to infrastructure has been at an all-time high in Union budget 2024, at Rs 11 lakh crores. Infrastructure contributes 10 per cent to Indian GDP.
Out of the total budget allocation, Rs 2 lakh crores have been specifically allocated for highway projects. Chart 1 demonstrates year-wise allocations to the infrastructure sector. The Ministry of Road Transport and Highways (MoRTH) is an apex organisation under the central government. MoRTH is responsible for policies related to road transport, national highways and transport research, with to the aim of increasing the mobility and efficiency of the road transport system in India. Under the aegis of MoRTH, NHAI is responsible for the development, maintenance and management of national highways.
MoRTH’s vision statement underscores its ambition to build safe, sustainable and efficient road infrastructure that meets international standards. In addition, MoRTH provides regulatory oversight for road transport and highways, guiding the activities of the National Highways Authority of India (NHAI) with both policy and financial support.
India’s national highway network has been expanding significantly. In last five years, India has constructed more than 24,000 km of highways, growing from 90,000 km in March 2014 to approximately 150,000 km by July 2024.
As part of its responsibility to construct a safe and efficient road network, MoRTH works on driving cost efficiency using alternate materials. Before these are issued for implementation through circulars, extensive research, drafting, stakeholder consultations and multiple revisions take place.
Environmental and economic impact of road construction
The cost of constructing highway infrastructure is significant, that is, a 40-45 km, six-lane highway project generally costs around Rs 1,500 crores and requires substantial natural resources such as earth (soil) and aggregate. Earthwork, forming the foundational layer, accounts for 15-18 per cent (1.2-1.3 crore cubic metres of soil) of the project cost. Aggregate represents 10-12 per cent (around 1.5 million metric tonnes) of the budget. Essential materials such as steel and cement add another 12-15 per cent (approximately 70,000 mt of cement and 15,000 mt of steel needed for such a large-scale project. As a nation with limited resources that fall short of our needs, adopting modern construction practices is essential. Every opportunity to conserve resources must be embraced to ensure sustainable growth and development.
Government agencies, private EPC companies and designers are increasingly adopting greener and cleaner construction approaches to optimise resource consumption to save cost and reduce the negative impact on the environment.
MoRTH has introduced nearly 20 policy circulars focused on practices allowing alternative materials and implementation of value engineering to reduce resource consumption and save costs.
Some of the alternative construction materials and practices are as follows:
- Fly ash: The ministry mandates fly ash use in road projects within 300 km of power plants for environmental benefits and sustainable infrastructure. This could lead to savings of more than Rs 1,500 crore.
- Waste plastics: Incorporating 6-8 per cent of waste plastic by weight into bitumen can yield savings of around Rs 500 crore, help maintain temperatures and prevent degradation as well.
- Geosynthetics: These polymeric materials used in road construction improve soil strength and resource conservation, saving Rs Rs 400-500 crore. Usage of Geosynthetics helps in reducing aggregate consumption thereby helping conserving resources.
- Standardised shoulder width: New circular mandates standardised shoulder widths on national highways for safety and consistency, with specific requirements for different terrains and road types.
- Reclaimed material: The MorTH guidelines mandate the use of reclaimed materials in base/sub-base layers or other construction areas, such as road shoulders, while meeting quality standards. The reuse of reclaimed material can save up to Rs 500 crore.
Note: These calculations are based on an assessment of around 300 highway projects and certain assumptions.
While these number seem attractive, it is important to understand the challenges in implementation.
Addressing implementation challenges
Despite these initiatives, challenges remain in implementing these sustainable practices being introduced through policy circulars. The Road and Bridge Works Specifications were revised in 2013 through the fifth revision. Since 2013, around 20 circulars have been issued but are pending for implementation. Before these circulars are applied to current and upcoming projects, structural adjustments in NHAI contracts need to be made, leaving a gap between policy creation and implementation on ground. A study of five out of twenty key circulars suggests that full implementation could yield savings of Rs 7 crore–Rs 12 crore per project, equivalent to around 2 per cent of total project costs while conserving natural resources. Considering the scale of construction we are talking about in India, this amount stands at around Rs 3,500 crores, extrapolated from the analysis of around 300 projects.
These circulars can be implemented by integrating them with feasibility studies, detailed project reports (DPRs) and Schedule “D” of NHAI contracts. Bridging this gap requires coordinated efforts among the ministry, agencies and contractors. .
To make timely implementation of the circulars issued by MoRTH a routine feature, a policy change can be made – “automatic integration of all circulars issued before 60 days of the bidding date for new projects”. This will enhance sustainability, cost-effectiveness and quality.
Additionally, to promote R&D at the end of EPC companies, a gain-share model will help. The gain share model will incentivise EPC companies to develop and implement cost-efficient practices by offering financial benefits for successful implementations. Agencies could include contractor-identified savings in future DPRs, enabling optimised capital allocation. This approach will encourage contractors to invest in innovation hubs and collaborate with peers, strengthening their market position and improving financial performance.
Moving towards future
India’s Vision 2047 marks a transformative journey towards a future with sustainable, world-class infrastructure. MoRTH is at the forefront of this endeavour, playing a pivotal role in shaping India’s infrastructure landscape. However, achieving these objectives requires the formation of robust partnerships that are beyond the boundaries of ministries, government agencies and private contractors.
To accelerate this innovation and drive economic growth, it is imperative to incentivise private sector participation. This can be achieved by fostering an environment that rewards creativity and technological advancements. A collaborative approach that involves research institutions will further enrich the infrastructure ecosystem.
By integrating these strategies, ongoing projects are set to establish a paradigm that is in harmony with the environment as well. As the country nears its centenary, such concerted efforts will be instrumental in realising the vision of a developed India with modern infrastructure.
Praveen Bajaj, Senior Manager, EY India, also contributed to the article. The views expressed in this article are personal.
