Private investment in roads in India declines

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Private investment in roads in India declines

According to data provided by the Indian Highway Ministry, private investment in Indian road projects has declined for the first time in seven years.

Investment in 2013-2014 was a third of the investment attracted in 2011-12, when there was a record high. In 2011-2012, project award was highest at 6,644 km while in 2013-2014 project award has been 2,844 km.

The lack of bank financing for new projects, delays in land acquisition and permits, exaggerated premium payment offered during the last two years and the lack of equity of among private developers are a few of the reasons that could explain this decline.

For instance, last week, Gammon Infrastructure and the National Highways Authority of India (NHAI) agreed to terminate concession contracts for two road projects that had been awarded to the company in 2012.

However, the share of the private sector in total expenditure in the highways sector has increased over the past decade from 18 % in 2004-05 to as much as 61 % in 2011-12.

Over the past 10 years, more than 27,000 km have been awarded and over 18,800 km have been built. The highways sector got a boost with the National Highway Development Project (NHDP) programme, originally launched during Atal Bihari Vajpayee's tenure as prime minister in 1998.

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