Writing about India’s 15,500-mile highways program is an exercise in portraying a glass that is half full and half empty. It is half full because, after decades of inactivity, real progress has been made in the last eight years. But it is half empty because that progress is far less than it should have been, especially in the last three years – mainly as a result of government lethargy.
A couple of years ago I wrote an article in Fortune that basically praised the improvements to India’s highway system. Though far from perfect, there had been far more progress than anyone would have thought possible a few years earlier. Some 3,750 miles (6,000 kms) of highways had been built between 1999 and the end of 2005 at a cost of about $7 billion, mostly on the Golden Quadrilateral highway that links India’s four biggest cities of Delhi, Mumbai, Chennai and Kolkata.
My New York editors were slightly more skeptical and headed the piece “On The Road To Repair,” which was fair because progress had been bumpy, like the roads (an inevitable pun). Massive delays had been caused by slow land acquisition.
Corruption and bureaucratic lethargy were widespread, as was extortion by gangsters and Naxalite (Maoist) rebels in some areas. Foreign companies had generally stayed away, and not all those (mostly from Asia) that had won contracts were successful – a Chinese contractor had its contract terminated for lack of progress, and Russian firms had problems.
Little has changed in the two years since my article appeared, though new roads have been built (more on this below). My foreign friends are unimpressed, complaining about muddle and jams on the Delhi road to Agra and life-threatening drivers (and animals) on both that road and the highway to Jaipur and beyond. Many Indian friends typically refuse to believe that anything good could be done by the government, and it is fashionable for the Indian media (justifiably) to draw attention to the problems, while usually ignoring the achievements.
But India’s highway program has been a success, especially in the early years when the energetic Minister of Highways, Maj. Gen. B.C. Khanduri, a (then 71-year-old) retired army engineer who is now chief minister of the state of Uttarakhand, was in charge. He had enthusiastic backing from Atal Bihari Vajpayee, the Prime Minister, whose pictures were plastered in banners across completed and partially completed highways proclaiming, rightly, a success by his Bharatiya Janata Party (BJP) government.
Ironically, here is where a new set of problems emerged. When the BJP unexpectedly lost the 2004 general election, Sonia Gandhi, who heads the Congress-led coalition government, and her ministers did not want to draw attention to their predecessor’s successes.
Manmohan Singh, the prime minister, is an enthusiast and has ordered widespread six-laning of four-lane highways, but T.R. Baalu, his Minister of Road Transport Shipping and Highways, seems more interested in promoting a shipping canal between his home state of Tamil Nadu and Sri Lanka than in building highways elsewhere.
The National Highways Authority of India (NHAI) is an outpost of stifling bureaucracy and its press relations are virtually non-existent – statistics on progress are handled by a well-meaning librarian who has to consult his finance department for values of contracts.
There has also been extensive infighting between the NHAI and the Planning Commission, which has been trying to transfer funding from the public to the private sector. The Vajpayee government was arguably over-generous in its use of public funds.
That has led to battles over new public private partnership (ppp) terms and a model concession agreement is now in use that lays down new requirements on early land acquisition and other conditions. The size of contracts has been enlarged to an average of 60 miles, with several up to 120 miles, many times previous levels.
The hope is that this will attract more foreign firms, which would add expertise and speed up construction, though Indian companies counter that foreigners are not needed. Most non-Asian firms are mainly interested in handling specific tasks like toll road management or acting as minority partners, and that will not bring in the necessary funding.
As a result, the general impression is that the National Highways Development Project is doing badly because progress on the final 200 miles of the Golden Quadrilateral, started in 1999, has been very slow.
Only 760 miles have been completed on 4,500 miles of highways that will run from north-to-south down the length of India and east-west across the country. Even so, the total length of contract awards and finished projects are at last increasing: the number of new contracts awarded and miles of completed roadwork are expected to double, to 8,700 miles and 4,350 miles, respectively, in the next four years.
I still argue that the project is an overall success, but most of the credit for that goes to the old BJP government. The current administration needs to show more Ministerial enthusiasm, attract more foreign investors and contractors, cut the bureaucratic squabbling and push for completions on time.