India’s road construction faces budgetary constraints

India has the largest network of roads in the world but it is the condition of the latter that faces a great deal of criticism and condemnation. Union Government budgetary allocations which go to finance of roads and national highways is on the decline. Loans from banks and international funding and funding from private sectors have therefore had to step in to offer financial assistance for these projects.

Now highway projects are also facing problems with lending banks and this has led to a number of projects being called off. National Highway Authority of India had cancelled two projects earlier last year due to lack of proper financing while similar situations are likely to crop up in the future as well unless the Government of India steps in an reviews and revises lending operation of these banks. Lending facilities are being reviewed by both the Finance Ministry and RBI to find out more amicable means of roadway financing.

The Finance Ministry has also brought to the fore the urgent need to secure projects and deals prior to bidding. This will safeguard the Bank’s interest in event of any stalling of projects which would hamper the repayment of loan and leads to risk of bad debts. This is a situation for lending banks, construction companies and Highways Ministry to solve and it is hoped that the proposals see light of day with proper implementation so as to see renewed improvement on Indian roads and national highways.