Over 20 per cent of the total credit advanced to the road sector were non-performing assets (NPAs) as on September 2017— a nearly twenty time jump from 2012-13, the Economic Survey analysis has said while pointing out stress signals in what is billed as a booming road construction sector in India. Between 2012-13 and 2017-18, the total credit pumped into the road sector grew by 41 per cent to Rs 1,80,277 crore. During the same period, however, the share of NPAs in them grew from 1.9 per cent to 20.3 per cent.
Road Transport and Highways ministry officials said the figure of NPAs could be out of context because road projects typically have long gestation periods. Moreover, they said all projects have been revived and new life has been infused into historically languishing projects.
Analysing the sector, the survey points out that out of the 482 ongoing projects in road transport and highways, 43 projects face cost overruns and 74 projects are behind schedule. The total bouquet of the 482 projects is worth Rs 3,17,373.9 crore.
“Some of the projects under different phases of National Highway Development Program are delayed mainly due to problems in land acquisition, utility shifting, poor performance of contractors, environment/ forest/wildlife clearances, Road Over Bridge (ROB) and Road Under Bridge (RUB) issue with Railways, public agitations for additional facilities, and arbitration/contractual disputes with contractors etc,” the survey says.
The inputs on NPAs, ministry sources said, did not go from the ministry but were taken from RBI data and reflected money borrowed by concessionaires for the road projects. The NDA government has been engaged in a series of policy interventions to reduce stress on the banking sector vis-a-vis NPAs.
The Nitin Gadkari-led Road Transport and Highways ministry has taken initiatives to revive the highways constructions sector since 2014 through various innovative financing models, including the Hybrid Annuity Mode, to add renewed viability in the projects. The ministry and NHAI have been monitoring the stalled projects. Wherever physical completion is established, one-time fund infusion by NHAI is being done to revive stalled projects. The funds are being arranged through the common fund available with NHAI.
“With proactive policy interventions, around 88 per cent of these projects have now been put back on track, or appropriately re-engineered and restructured and the total number of stalled projects have been reduced to three,” the survey says.
Financing routes like monetisation of projects through the Toll-Operate in Transfer model, securitisation of toll revenue, adopting the ‘Infrastructure Investment Trusts route, other innovative financing options including LIC, Long Term Pension Funds etc., have been taken to attract fresh capital from the market on the strength of already operational projects.