Infra gap may close in 5-6 years: KPMG-CII report
Faster highway development in the country could bridge the infrastructure gap over the next 5-6 years and the government's task would then be largely limited to quality service for road users, safety solutions, and enhanced use of technology among others, as per a KPMG-CII report.
The joint report has projected a total investment of Rs 19 lakh crore over the next five years, or about Rs 3.8 lakh crore annually.
The projections is based on average road construction cost of about Rs 30 crore per kilometre including land acquisition cost and factoring in inflation for road construction at a conservative 3 per cent.
The Ministry of Road Transport and Highways (MoRTH) has decided to complete 60,000 kms of National Highways (NHs) in the next five years at an average construction rate of 40 kms per day.
"The current focus on construction of roads and highways is expected to continue over the next five to six years. Post that the focus is expected to shift to efficient operations and maintenance of roads and enhanced service provisions to road users. In addition to this, multi-modal integration is expected to gain further significance, both in passenger and freight," said Davinder Sandhu, Partner and Head - Transport and Logistics, KPMG in India transport.
On funding issues, the report said that the approach levers that have been identified earlier need to be built upon. It noted that funding source for the government is limited and it has to tap into internal extra budgetary resources as much as possible, subject to keeping tab on the extent of future liabilities.
"The likely options to raise capital are bonds, masala bonds and debts from Multilateral Funding Institutions (MFIs)," it said.
The report, titled Roads and Highways sector - Current trends and future road map, applauded the policy measures taken by the government and suggested their continuation.
"Other measures that can be explored are reduction of tax on infrastructure bonds and extension of tax holiday to infrastructure developers. Some innovative PPP modes similar to Least Present Value of Revenue can also be explored," it said.IANS