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Highways in new growth push

The government is set to put highways stalled by the election code of conduct on a fast track. Rs 47,000-cr deals to be awarded as new government gets cracking after election lull, report Gaurav Choudhury and Samiran Saha.

business Updated: May 21, 2009 01:57 IST

The government is set to put highways stalled by the election code of conduct on a fast track. Projects of the National Highway Development Programme (NHDP) worth Rs 47,000 crore are set to be awarded shortly after the new government assumes office, government sources told Hindustan Times.

A senior official, who did not wish to be identified, said that since December, projects worth just Rs 4,000 crore have been awarded because the model code of conduct had kicked in later, putting the brakes on announcements that might be construed as political.

“The government has been preparing to award these projects for past three to four months. Given the quantum of capital they can invite bids from anywhere between 35 to 50 projects within 2009,” said Pravesh Minocha, managing director, infrastructure consulting firm Feedback Ventures.

Meanwhile, the Rs 10,000-crore refinance window opened for new projects through the India Infrastructure Finance Company Limited (IIFCL) as part of the stimulus package in December 2008, is still lying unused as no new projects in the last four months have reached financial closure, the official said.

In the backdrop of the global economic meltdown, the government had authorised the (IIFCL) to raise Rs.10,000 crore through tax-free bonds last December.

These funds were planned to be used by IIFCL to refinance bank lending of longer maturity to eligible new infrastructure projects, particularly in the highway and port sectors.

The NHDP programme, first conceived in 2000, is being carried out in five simultaneous phases covering a distance of 33,097 km. About half of these projects, totalling 15,731 kms, are, however, yet to be awarded.

Experts also underlined the need for speedier implementation of the projects, which are considered key to reviving economic growth hit by a downturn. While easier credit rates encourage private consumption that generates demand, direct spending by the government and bodies like the NHAI is also considered critical to revive the economy.

“I believe that implementation should be on the government’s agenda,” Amitabh Mundra, Director, Simplex Infrastructure.