Highway contract awards under Bharatmala slowed down in FY24 over pending cabinet approval

The approval and bidding of national highways under the flagship Bharatmala programme recorded a shortfall of 34 percent in FY24 as the revised cost of the scheme is pending approval from the Cabinet. 

According to the Ministry of Road, Transport and Highways (MoRTH), awards for highway construction in FY24 stood at 8,581 km against a target of 13,290 km.

“Major shortfall was because of Bharatmata where the revised approval of the Cabinet could not be obtained,” the ministry said in its annual performance report. 

Highway construction in FY24 stood at 12,349 km, with an average construction of 34 km per day. The highest highway construction of 13,327 km was done in FY21, which included strengthening of 4,900 km. 

In its December 2023 forecast, credit rating agency ICRA said the model code of conduct for general elections, which came into effect in mid-March, was likely to further curtail awarding activity. Around 40-45 percent of the construction approval for the year is awarded in March alone.

The escalated cost of Bharatmala has been a cause of concern, and the Union Finance Ministry told MoRTH in 2023 not to award any new project under the scheme till there is Cabinet approval on the revised cost of the project.

“Pending the Cabinet approval for the revised cost of Bharatmala Phase-l, project awarding activity in the recent quarters has taken a beating,” said Vinay Kumar G, Sector Head of Corporate Ratings, ICRA.

In 2017, the Union Cabinet approved 34,800 km of national highway for development under Phase-I of Bharatmala Pariyojana. As of December 2023, 26,418 km (76 percent of 34,800 km) have been awarded for construction with the completion of about 15,549 km. The projects under Bharatmala are mainly funded by the Union government and resource mobilisation is done by the ministry.

The estimated cost of the project has doubled since 2017 from Rs 5.3 lakh crore to Rs 10.6 lakh crore due to an increase in land acquisition costs and a change in the composition and configuration cost of the project due to economic corridors and expressways.