National Highways

The Central Government is responsible for development and maintenance of the National Highways system. The total length of the network, as of today, is 70,548 km. The Ministry is carrying out development and maintenance work of National Highways through three agencies, viz. National Highways Authority of India (NHAI), State Public Works Departments (PWDs)

and Border Road Organisation (BRO).

In order to give boost to the economic development of the country, the Government has embarked upon a massive National Highways Development Project (NHDP) in the country. The NHDP is the largest highway project ever undertaken in the country. The NHDP is being implemented by National Highways Authority of India (NHAI).

NHDP Phase I& II: The Phase I & Phase II of NHDP comprises

Golden Quadrilateral (GQ), i.e. National Highways connecting four metropolitan cities - Delhi, Mumbai, Chennai & Kolkata having an aggregate length of 5,846 km.,
North-South & East-West Corridor (NS-EW) which comprises 4-laning of 7,142 km of National Highways connecting North-South corridor from Srinagar to Kanyakumari with Cochin-Salem spur and East-West corridor from Silchar to Porbandar,
380 Km length of National Highways are proposed to be upgraded to 4-lane standards for providing connectivity to 12 major ports of the country to NHDP, and
Upgradation of 962 km of other important National Highways. The total estimated cost of the NHDP Phase I & II having a total length of 14,145 km is about Rs.80,626 crore.

NHDP Phase-III: NHDP Phase-III involves 4/6 laning of 12,109 km of NH having high-density corridor connecting State capitals, important tourist places, economically important areas etc. on PPP basis at an estimated cost of Rs.80,626 crore.

NHDP Phase-IV: Phase IV of NHDP comprising 2-laning with paved shoulders of 20,000 kms of National Highway. The Government has approved the upgradation/strengthening of 5,000 KM of single/intermediate/two lane National Highways to two lane with paved shoulders under NHDP Phase-IV A on BOT (Toll) and BOT (Annuity) basis at an estimated cost of Rs.6950.00 crore.

NHDP Phase-V: Phase V of NHDP comprising six laning of 6,500 km of existing 4 lane highways on Design Build Finance & Operate (DBFO) basis at estimated cost of Rs.41,210 crore. This includes 5,700 km of GQ and 1800 kms at other selected stretches.

NHDP Phase-VI: Phase VI envisages development of 1,000 km fully access controlled expressways under Public Private Partnership (PPP) model following Design-Build- Finance-Operate (DBFO) approach at an estimated cost of Rs.16,680 crore.

NHDP Phase-VII: Phase VII envisages construction of stand alone Ring Roads, Bypasses, Grade Separators, Flyovers, elevated roads, tunnels, road over bridges, underpasses, service road etc on BOT (Toll) mode at an estimated cost of Rs.16,680 Crores.

Special Accelerated Road Development Programme For North-East Region (SARDP-NE)

This programme has been framed with the objective to upgrade NHs connecting State Capitals to 2/4 lane, to provide connectivity of 58 District Headquarter towns of NER by at least 2 lane road, improving road connectivity to remote places and places of strategic importance in NE region. The programme envisages improvement of about 9,760 km (5,104 km of NHs and about 4,656 km of State roads and roads of Strategic Importance). The programme has been divided into 3 parts, Phase 'A' covering 2616 km length of road, Phase 'B' covering 4825 km and Arunachal Pradesh Package of Roads and Highways covering 2319 kms. Phase 'A' of SARDP-NE and Arunachal Pradesh Package of Roads and Highways has been approved by the Cabinet for implementation and Phase 'B' has been approved for DPR preparation only. This will also ensure the connectivity of all District Headquarters, which are still not connected to the NHs in the eighth NE States. Up till June 30th 2009, estimates amounting to Rs.3406 crore have been approved for improvement of 1058 km length of roads under SARDP-NE. OUt of 1058 km length approved by the Ministry, 450 km has been completed at an expenditure of Rs.1,796 crore.

SARDP-NE includes the projects on the PPP mode and the projects with 1315 km length has been identified on the BOT (Annuity) mode, under Phase 'A' and Arunachal Pradesh Package of Roads and Highways at a tentative cost of about Rs.11,550 crore. Against 1315 km length identified under BOT (annuity), feasibility report for 2 road projects aggregating to 718 km length has been finalized and RFP issued to the pre-qualified bidders. The note for CCI for these projects is being submitted to Cabinet Secretariat.

Public-Private Partnership

Traditionally, the road projects were financed only out of the budgetary grants and were controlled/supervised by the Government. The road sector has attracted very limited private sector participation in the past. While the traffic has been constantly increasing at a rapid pace, the traditional system of financing road projects through budgetary allocation has proved to be inadequate. It was in this context that the necessity for exploring the innovative means of financing the highly capital intensive road projects was felt.

The beginning of a significant private sector participation in road projects was made with the launching of India's largest road project - National Highways Development Project (NHDP). To encourage private sector participation, several initiatives have been taken by the government; which include Declaration of the road sector as an industry.

Provision of capital subsidy up to 40% of the project cost to make projects commercially viable.
100% tax exemption in any consecutive 10 years out of the first 20 years of a project.
Provision of encumbrance free site for work, i.e. the Government shall meet all expenses relating to land and other pre-construction activities.
Foreign Direct Investment up to 100% in road sector.
Easier external commercial borrowing norms.
Higher concession period, (up to 30 years).
Right to collect and retain toll.
Projects undertaken by the Ministry under Public/Private Partnership

BOT (Toll) Scheme
In a BOT project, the concessionaire (private sector) is required to meet the upfront cost and the expenditure on annual maintenance. The concessionaire recovers the entire upfront cost along with the interest and a return on investment out of the future toll collection.
BOT (Toll) Scheme : As on April 2009 ; 94 projects have been taken up valued about Rs.38168.04 crore Build Operate and Transfer (BOT) basis (Toll based projects). Out of this, 43 projects have been completed and 51 projects are under progress.

BOT (Annuity ) Scheme

In an Annuity project, the concessionaire (private sector) is required to meet the entire upfront cost (no grant is paid by the client) and the expenditure on annual maintenance. The concessionaire recovers the entire investment and a predetermined cost of return, out of the annuities payable by the client. The tolling is done by the client.
BOT (Annuity ) Scheme: As on April 2009 ; 25 projects valued about Rs.9411.88 crore with a length of about 1376 km have been taken on Annuity basis and out of this 9 projects have been completed.

Central Road Fund

The Central Government has created a dedicated fund, called Central Road Fund from collection of cess from petrol & diesel. Presently, Rs.2/- per litre is collected access on petrol and High Speed Diesel (HSD) Oil. The fund is distributed for development and maintenance of National Highways, State Roads, Rural Roads and for provision of road overbridges/under bridges and other safety features at unmanned Railway Crossings as provided in Central Road Fund Act, 2000. Present Loss of Rs.2.00 is bring distributes in the following manner Rs.1.50 is being allocated in the following manner.

50% of the cess on high speed diesel (HSD) oil for development of rural roads.
50% of cess on HSD and the entire cess collected on petrol are allocated thereafter as follows:
1. An amount equal to 57.5% of such sum for the development and maintenance of National Highways;
2. An amount equal to 12.5% for construction of road under or over bridges and safety works at unmanned railway crossing; and
3. An amount equal to 30% on development and maintenance of State Roads.
Out of this amount, 10% shall be kept as reserved by the Central Govt. for allocation to States for implementation of State Road Schemes of Inter-State Connectivity and Economic Importance to be approved by the Central Government.
Balance cess of Rs.0.5 per litre is entirely allocated for development and maintenance of National Highways.

An allocation of Rs.16,680 Crore has been made under the CRF for 2009-10 with the following break-up:

CRF for 2009-10
National Highways	Rs.8,578.45 Cr.
Rural Roads	Rs.4,843.13 Cr.
Railways	Rs.9,58.36 Cr.
Grant to State Governments and UTs for State roads	Rs.2,070.06 Cr.
Grant to States & UTs for Roads of Inter-State Connectivity and Economic Importance	Rs.230.00 Cr.
Total	Rs.16,680 Cr.

State Sector Roads

Since the State Highways and Major District and Rural Roads are under the responsibility of respective State Governments, these are developed & maintained by various agencies in State and Union Territories. However, the funds are also being provided from the Central Road Fund (CRF) by the Union Government for the development of State Roads under the following schemes:

Improvement of State Roads from the CRF

The funds from the CRF are provided for improvement of State Roads other than rural roads. During the year 2008-09, 1313 proposals amounting to Rs.5126 crore have been sanctioned for improvement of State Roads under CRF. An amount of Rs.2070.06 crore has been allocated for the year 2009-10 for improvement of State Roads under CRF.

Economic Importance & Inter State Connectivity Scheme

To promote inter-state facilities and also to assist the State Governments in their economic development through construction of road bridges of Inter-state and Economic Importance, Central Government provides 100% grant for inter-state connectivity projects and 50% grant for projects of economic importance. This fund is also provided from the CRF.

During the year 2008-09, 20 proposals amounting to Rs.162.37 crore with central share of Rs.81.19 crore under EI scheme and 27 proposals amounting to Rs.303.20 crore under ISC scheme have been accorded in-principle approval by the Ministry. An amount of Rs.230.00 crore (Rs.213.97 crore for the States and Rs.16.03 crore for UTs) is earmarked under this scheme for the year 2009-10.