India on a major expansion spree

As part of a major privatisation drive, India is all set to give away a record 7,300 kms of road building contracts worth around US $ 12 billion. This will make developers more interested in taking on projects. Further foreign investors will also be eager to invest. These factors would mean an increase in investment in the road sector by 40 per cent next year. Additionally, it will also allow the country to meet the target of building 20 kms by 2014, boosting the country’s economic growth.   In comparison to the past 4 -5 years, the sector has seen tremendous growth. Further overseas private funds are pouring in for investing in projects. At the same time, domestic constructors are taking on big projects.Owing to land acquisition problems, around 20 – 25 per cent road projects had been delayed for years. Purchasing land for projects still continues to be a tough task.India’s road network is the world’s second largest, but its densely populated cities are heavily congested and inter-city highways clogged up with trucks, tractors and even livestock in more rural areas. Slow delivery times raise business costs for companies and help stoke the country’s high inflation. The government has now privatized the function of infrastructure. Rather, firms now bid to build a road and operate it themselves, collecting toll fares for a fixed period under a model known as build-operate-transfer (BOT). This trend has helped slash construction delays as there is an incentive for road builders as they finish the job as quickly as possible and start collecting tolls.

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