India Plans $5.3 Billion of Highways as Jams Sap Growth
Stock Chart for Transport Corp of India Ltd (TRPC)
(Corrects how plan will be funded in first and third paragraphs.)
India is considering a 300 billion- rupee ($5.3 billion) plan to triple the length of its expressway network to ease traffic jams that are slowing trade, wasting fuel and sapping economic growth.
The country intends to add about 1,600 kilometers (1,000 miles) of roads with at least six lanes, Raghav Chandra, joint secretary at the Ministry of Road Transport and Highways, said in an interview on June 14. He didn’t give a timeframe for awarding construction contracts or for completing the projects.
The new highways, linking major cities, will have higher tolls than existing roads and fewer access points so trucks won’t get stuck at toll gates or behind queues of motorcycles, auto-rickshaws and tractors making local trips. India is planning the network of privately-funded roads as it contends with congestion that costs $5.5 billion a year, according to a study by Transport Corp. (TRPC) of India and the Indian Institute of Management, Calcutta.
“This is the first step towards really improving traffic movement,” said Vishwas Udgirkar, a Gurgaon, India-based senior director for transport at Deloitte Touche Tohmatsu India Pvt. “India is way behind other countries in creating such infrastructure.”
India’s 6 million trucks now average 19.8 kilometers per hour because of jams, according to the study backed by trucking company Transport Corp. Washington D.C. has the slowest traffic in the U.S., with an average speed of 74 kilometers per hour, based on a 2010 study by TomTom NV. Faster trips could save Indian truckers as much as 600 billion rupees of fuel a year, the Transport Corp. study said.
“There are too many disruptions by road,” said Mayank Pareek, head of sales and marketing at Maruti Suzuki India Ltd. (MSIL), which uses 400 trucks a day. “Everywhere you get slowed down.”
The automaker, which has about 20,000 cars in transit at any one time, is considering moving 30 percent of new vehicles by rail within three years, up from 5 percent now, to avoid the jams, he said.
Among the new expressways will be three connecting New Delhi with the northern cities of Meerut, Jaipur and Chandigarh, said J. N. Singh, finance director at road-building agency National Highways Authority of India. Others will link Chennai and Bangalore in the south, Mumbai and Vadodara in the west, and Kolkata and Dhanbad in the east. The roads will be designed for speeds as fast as 120 kilometers an hour, Chandra said.
About 65 percent of India’s freight and 80 percent of passenger traffic moves on the highway network, which mainly comprises two-lane roads. The nation has 700 kilometers of expressways, mainly reserved for cars, trucks and buses. These roads, which have at least four lanes, run between Mumbai and Pune, and between Ahmedabad and Vadodara. China has 74,000 kilometers of expressways, according to the Transport Corp.-IIM study. In 1989, China had 147 kilometers of such roads.
In August 2009, Indian Prime Minister Manmohan Singh set a goal of building 20 kilometers of new roads a day as part of efforts to improve infrastructure ranked below Guatemala’s and Kazakhstan’s by the World Economic Forum. The daily average was 4.5 kilometers in 2011, according to PricewaterhouseCoopers LLP. India aims to spend as much as $1 trillion in five years on roads, ports and power plants.
Delays in acquiring land are the biggest challenge for Indian infrastructure projects, Deloitte’s Udgirkar said, as farmers refuse to leave their farms fearing they will lose their livelihoods. A quarter of the 226 roads commissioned by NHAI are behind schedule for reasons including delays in acquiring land, C.P. Joshi, road transport and highways minister, said in December.
“What we need to focus on is completing these projects on time,” said Manish Saigal, a partner at KPMG in India. “NHAI has awarded a lot of projects, but on the big freight corridors they are still lagging behind.”
An elevated road to Chennai’s port in Tamil Nadu state is among the projects held up because of land delays. In September, farmers also protested against the acquisition of plots for widening a highway in the western state of Rajasthan, according to Minister Joshi.
NHAI, which oversees road building, has already begun buying land for one of the new expressways, running from Mumbai to Vadodara, Singh said. The state agency intends to complete land acquisitions before issuing construction tenders, he said.
The proposed roads will have only about six entry and exit points, Singh said. Tolls will also be as much as 1.5 times more than a six-lane highway, he said. On the 28-kilometer Delhi- Gurgaon expressway, trucks pay as much as 82 rupees per trip.
G.R. Shanmugappa, who operates 80 trucks from southern Karnataka state, said he’d be happy to pay higher tolls for better roads. Highway improvements could help cut costs as much as 12 percent on a 4,200-kilometer New Delhi-Bangalore round trip, he said. Trucks could also cover as much as 700 kilometers a day, compared with the 300 kilometers they run now, he said.
“I wish there were roads that allow us to drive faster,” he said. “Then we could return home sooner.”
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