EXPLAINED NATIONAL

Bharatmala Pariyojana – Highway to Economic Growth

Indian Highways

National Highways constitute 2% of the road network and facilitate 40% of the total road traffic in India. Roads being key to the development of the logistics sector play a key role in the growth of the economy. As the economy of a country starts developing, it becomes important to maximise the efficiency of the movement of goods across the length and breadth of the country.

Towards this aim, an ambitious program called Bharatmala was launched by the Modi Government to enhance the efficiency of the logistics sector by developing corridors, connecting borders, ports, coasts and building more expressways. Bharatmala aims to fill the gaps in the existing infrastructure by projecting traffic load and undertaking a detailed Origin-Destination study.

Importance of Bharatmala

Bharatmala aims to enhance the efficiency of the logistics sector in the country. As per a report by the Ministry of Road Transport and Highways, the cost of logistics forms 13-14% of the cost of goods, as compared to 8-10% in developed nations. This high cost of the logistics component reflects structural inefficiencies that have crept in the system.

Why Bharatmala?

Lack of inter-modal mix, along with the under-utilization of fleet capacity, and less number of logistic hubs have led to lower logistic productivity and higher cost of movement of goods. Bharatmala aims to address these concerns by shifting the current modus operandi i.e. point-to-point freight movement to a hub-and-spoke model, as shown in Figure 1.

Figure 1: Hub and Spoke Model: Development of Multi- modal Logistics Parks. Source:  https://twitter.com/PIB_India/status/923082063229489152

Increase in logistics efficiency will ensure decongestion, reduction in transportation and storage costs, and lower pollution levels. Development of 15 logistics hubs is expected to entail a capital investment of INR 33,000 crore. This cost includes land acquisition, construction of storage space, and other infrastructure facilities.

Key features of Bharatmala
  • Bharatmala will be implemented in seven phases, of which Phase I, with a budget of Rs 5.35 lakh crores (to be used over 5 years) aims to address around 25 thousand km of road infrastructure along with 10 thousand km of road work under National Highways Development Project (NHDP).
  • Shortest path for 1,200 routes, that bear 90% of the traffic, will be mapped.
  • Bharatmala is expected to connect 550 districts.
  • Potential of Phase I, Bharatmala is expected to generate an estimated at 10 crore man-days.
  • 600 projects have been identified, of which those that receive proactive support from the respective State governments will be taken up on priority.
Components of Bharatmala
  • Economic corridors: are expected to bear 25% of the load in the future.
  • Inter-corridor and feeder roads to National and Economic Corridors: along with economic corridors are expected to bear 80% of the freight traffic.
  • National Corridors Efficiency Improvement: The Golden-Quadrilateral and NS-EW will be classified as National corridors. Due to the heavy traffic (~30,000 Passenger Carrying Units (PCUs)) these highways are overloaded. Thus, a need for additional ring roads around these highways has been registered. In Phase 1 of Bharatmala, preferred routes on these highways will be used for the development of logistics parks.
  • Border and International connectivity roads: These will ensure seamless cross-border trade with Nepal, Bhutan, Bangladesh, and
  • Coastal and Port connectivity: This is in tandem with the Sagarmala program. Coastal road connectivity is expected to boost both trade and tourism.
  • Greenfield expressways: to address heavy traffic on existing National and other highways.

Table 1: Components of Bharatmala (Source: https://twitter.com/PIB_India/status/923077992422588416)

Key Highlights
  • Civil work for around 4,500 km and a detailed project report for around 30 thousand km has been completed.
  • Tenders for 232 projects (i.e. around 11 thousand km of road) to the tune of around Rs 1.96 lakh crore have been released.
  • Rate of construction of highways (km/day) has improved consistently from 12 km/day in 2014-15 to 22 km/day in 2017-18.
Year Award (km) Construction (km)
2014-15 7,972 4,410
2015-16 10,098 6,061
2016-17 15,948 8,231

Figure 2: Award and Construction Statistics of National Highways (Source: https://pibindia.wordpress.com/2018/01/02/achievements-of-ministry-of-road-transport-highways-during-2017/

  • Unlike the UPA days, when most infrastructure projects were constructed to Built-Operate-Transfer (BoT) model, the Modi Government is undertaking projects on Engineering, Procurement and Construction (EPC) route and Hybrid Annuity Model (HAM) where the Government bears the entire project cost and 40% of the cost respectively. This minimises cost leakages and delays.
  • Moody’s Investor Service issuer ratings of National Highways Authority of India (NHAI) to Baa2 from Baa3; and revised the outlook to stable from positive.
Conclusion

Bharatmala Pariyojana is an umbrella program which aims to improve Logistics Productivity Index by ensuring a seamless, efficient, and safe movement of freight and passengers across India. Overall development of infrastructure based on the traffic projections will ensure high capacity utilization and lowering of the costs. Through federal cooperation across States, this project is expected to usher a culture of multi-modal freight movement across the country. Moreover, the state-of-the-art logistic parks on the back of technology will add a new layer of investment and economic opportunities.