Highways ministry to seek Cabinet nod to raise Bharatmala outlay

The highways ministry will soon seek cabinet nod for an almost 60% increase in the cost of Bharatmala, the Centre’s flagship highways development project, officials familiar with the development said.

Cost of the first phase of the programme when it was first approved in 2017 was estimated at around Rs 5.35 lakh crore. Now it has shot up to around Rs 8.5 lakh crore mainly due to underestimation and delays in land acquisition, they said.

“A further approval will be required for the revised cost of the Bharatmala programme,” a senior government official told ET on condition of anonymity.

“It is expected that the ministry will seek approvals in the next financial year (2021-22).”

Around 65,000 km of national highways are to be constructed under the Bharatmala Pariyojana. Under its first phase, the National Highways Authority of India will build 34,800 km of highways by 2022.

Confirming the development, a second official said, “Costs have gone up due to underestimation, delays, and land acquisition.”

Land acquisition cost has exponentially increased over the last few years to around Rs 3.40 crore per hectare currently against Rs 90 lakh per hectare in 2013-14, as per ratings agency ICRA. Land cost alone accounts for more than 30% of the total expenses of NHAI, ICRA said in a recent report.

Awards for the phase-I of Bharatmala are expected to be completed by FY23, while execution is expected to be completed by FY25.

Awards for the phase-I of Bharatmala is expected to be completed by FY23, while execution is expected to be completed by FY25.

NHAI is looking to raise around Rs 65,000 crore in FY22 and FY23 to fund the project. The authority plans to use various funding modes, including an infrastructure

(InvIT), and toll-operate-transfer model to fund the Bharatmala Pariyojana.

NHAI’s debt at the end of FY20 was Rs 2.49 lakh crore, and it will cross the Rs 3 lakh crore mark if it meets its borrowing target for the ongoing fiscal year. The total debt of the highways building authority has risen over ten times since the BJP government took charge in 2014-15, when it stood at Rs 24,188 crore.

The outstanding debt increased to Rs 44,567 crore in FY16, Rs 77,742 crore in FY17, Rs 1,21,931 crore in FY18, and Rs 1,78,867 crore in FY19.

The next two financial years will be crucial for NHAI as its fund requirement for completion of Bharatmala will peak, said the first official quoted above.