Nitin Gadkari has urged agencies involved in road building projects across India to create an infrastructure fund to finance road projects.
Speaking at a virtual event organised by industry body Assocham on Friday, Gadkari made this proposal. He said as of now only big contractors who are financially strong and have good relations with banks are getting funds.
Gadkari said, “Why don’t you find an alternative? Each of you should put ₹100 crore… to form an infrastructure finance company. I will ask NHAI to put equity and then you tie up with a foreign fund. The banks will behave only when they come to know that you have some other option. That’s how things work.”
Gadkari said that the the highways ministry does not have a financial arm to provide support to the contractors. “Bank guarantee and financial closure are becoming problem in case the hybrid annuity model (HAM) for building National Highways,” he said.
Gadkari cited examples of Indian Railways, which has an arm called the Indian Railway Finance Corporation (IRFC), and the power ministry which has Power Finance Corporation (PFC) to show where his ministry is lacking as far as funding is concerned.
Reassuring builders that the government intends to support the industry, Gadkari further said, “The people who are competent but banks are not supporting them, they are not in a position to bid for highway projects.”
Road infrastructure in India has been progressing at a rapid rate with a record 37 kms of roads being built every day. Despite the ongoing pandemic and restrictions, India continued to add significant length to the existing road network across the country.
The National Highways Authority of India (NHAI) recently achieved a major feat by building a four-lane highway of 2,580 metres length within 24 hours, creating a world record.
“Our ministry also achieved a record by constructing a 26 km one-lane road in 24 hours flat. This is due to the efforts put by our engineers, contractors and workers,” Gadkari said.
By March 20 this year, India has built 1,37,625 kms of highways compared to only 91,287 kms in April 2014. During this period, India has also spent five times more money to construct highways. Gadkari said that India has added more than 50 per cent length of national highways in the past seven years.