ICRA Projects Road Execution To Grow 5-8% In FY25 To 12,500-13,000 Kilometres

Road execution in India is likely to grow 5-8% to 12,500-13,000 km in the current fiscal, after recording a robust expansion of 20% in 2023-24, rating agency ICRA said on Tuesday. It added that the pace of execution in this fiscal will be supported by a healthy pipeline of projects, increased capital outlay by the government and focus on completion of projects by Ministry of Road Transport and Highways.

ICRA noted that road execution was impacted in the first half of FY24 on account of a prolonged monsoon in certain geographies, which affected productive days.

According to ICRA, the ministry’s project award pipeline is healthy, at above 45,000 km as of March 2024.

This is despite the awarding being significantly impacted in FY24 amid delay in approval from the Cabinet for the revised cost estimates of Bharatmala Pariyojana Phase 1, it added.

Consequently, the overall awards declined by 31% to 8,551 km in FY24 from 12,375 km in FY23.

ICRA pointed out that a similar trend was seen in FY19 before the last general elections, when the project awarding had declined by over 67% on a year-on-year basis.

The rating agency said engineering, procurement, and construction mode continues to be the mainstay of this process, accounting for 70-75% of the awards in FY24, followed by Build, Operate, Transfer- Hybrid Annuity Mode, accounting for 25-30% share.

"There were no awards under BOT-Toll in FY2024,' ICRA said, adding that in March 2024, the ministry amended the BOT-Toll model concession agreement to improve its attractiveness.