BUILDING ROADS – THE RIDE OUT OF PANDEMIC?

about 10 months ago
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It’s a part of folklore now how Henry Ford helped USA mitigate the recessionary impact to some extent by pushing full throttle on building roads – all across their vast country.

And even now, building infrastructure – roads and bridges is what Biden is bidding on to pull them out of the pandemic, helping generate employment and give an all-round boost to the economy.

India too is on the same road. We had done it earlier too and this time also, looks like a big thrust is being given to build new roads. In Q2FY21 itself, we saw an increase:

  • Govt awarded new contracts for 5697 kms of highways during current fiscal – a 2 times increase (YoY)
  • Target for FY21 in 11,000 kms – currently short by 48%.
  • Momentum picked up after pandemic – as low as 7 kms/day till April and increased to 26 kms/day by Sept’20 – highest during the peak in June at 33 kms/day.

And now the Govt has taken steps which will help mid-sized companies to also participate in the bidding process to make highways. This is thanks to the various relaxations, which the Govt provided to usher in more participation. Under the relaxations announced, what has really worked is the cut in performance guarantee, lower net worth requirement and major relaxations in technical eligibility.

While this is a great move in the right direction, we cannot help but wonder about the quality of the roads that will get built. The existing roads itself are in a bad shape and these were built on much tougher and higher eligibility criteria. Maybe, along with new roads, these existing roads need to be maintained.

When the various state Govt’s do not maintain what they already have and in that scenario, it doesn’t justify building more. Seriously, instead of concentrating only on making roads where there are no roads, a large part of the urban recovery can be built upon on repair and maintenance of existing networks – this actually ensures a higher rate of return from existing infrastructure.

Yes, we need more roads and more bridges but maybe what we also require is a more nuanced and hyper-local approach from state Govts on future transportation spending.

A bottom-up investment approach gives much higher returns with systems that are more empowering, responsive and just than our current top-down approach. What say?

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