NATIONAL HIGHWAY DEVELOPMENT IN INDIA

Abdhul Khadhir S.H, CE16M057

1 Introduction
The responsibility of development and maintenance of National highways lies with the Central
government.(Ministry of Road Transport & Highways). The ministry undertakes the development
and maintenance works of the NH network primarily through 3 agencies- National Highway
Authority of India (NHAI), Central Public Works Department (CPWD) and Border Roads
Organisation (BRO). The NHAI has embarked on an ambitious mission of development of
National Highways under the National Highway Development Program (NHDP) which aims at
bettering the condition of National Highways in the country and also its expansion.
NHDP focuses primarily on developing International standard roads with facilities for
uninterrupted flow of traffic with enhanced safety features, better riding surface, better road
geometry, better traffic management and noticeable signage, divided carriageways and service
roads, grade separators, over bridges and underpasses, bypasses, wayside amenities [1]

The NHDP covers about 55000 km at an estimated cost of around Rs. 2, 20,000 in over 7 phases,
most of which is still under progress.

2 Identification / Selection of Stretches

The main criteria for selection of road stretches are to provide connectivity and accessibility.
However, it also depends on the larger goals and objectives of National Highway development.
For instance, the main criteria used for identification of road stretches under phases I and II of
NHDP was the development of the Golden Quadrilateral and the North-South and East-West
corridors. In addition, there might be political and strategic considerations involved in the
selection of stretches. The functional importance of the stretch is also taken into account while
selecting the stretches.

3 Sanctioning of Projects

Initially, the Ministry of Road Transport & Highways (MoRTH) identifies the road
stretches that are to be built or upgraded.

It then proposes the inclusion of selected stretches under one of the phases of NHDP.

The proposal for approval of a phase is submitted to the Cabinet Committee on

Infrastructure (CCI).

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Once the CCI approves, MoRTH transfers the stretches under the phase to the NHAI for
implementation

NHAI conducts feasibility studies for each of the individual projects by preparing
Detailed Project Reports.

Then, NHAI sends the project to the Public Private Partnership Approval Committee
(PPPAC).

On obtaining approval from PPPAC, NHAI sends the project to the CCI for final
sanction.

4 Award of Projects
After the final sanction from the CCI, the process of engaging a concessionaire begins consisting
of various stages [3]

Pre-Qualification of companies based on their technical and financial expertise and their past

history on similar projects.

Accepting bids from the pre-qualified bidders.

Selecting the winning bid based on Quality or Cost or both.

Thus, the project is awarded to the successful bidder and an appointment date is fixed on which
the NHAI and the firm officially signs the documents and the project is transferred to the
concessionaire. The frim begins the construction activity from the date of appointment.

5 Financing of National Highway projects

The NHAIs NHDP and other projects are financed by the following modes: [2]

Central governments Gross Budgetary Support (GBS) and Additional Budgetary Support
(ABS)

Dedicated Central Road Fund (CRF) obtained by share on levy of fuel cess

External Assistance from International Institutions like ADB, World Bank, JBIC, etc
(very limited)

Collection of Tolls on highways

Private sector financing under PPP Models like- BOT, Annuity, Special Purpose Vehicles
(SPVs), etc

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

Market borrowings

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6 Land Acquisition
Until the enactment of National Highways Act (NHA) in 1956, lands for National Highways were
acquired under Land Acquisition Act 1894. The implementation of NHA hastened the land
acquisition process significantly. [4]

The NHA appoints an authority for the purpose of land acquisition which can either be
constituted from within NHAI or appointed at the district level, usually the revenue
department.

Unlike LAA which leads to tremendous delay in land acquisition, under NHA possession
can be taken any time after the declaration is made by giving a notice of 60 days to the
landowner.

NHA does away with the Urgency clause present in LAA wherein which the land could
be acquired after issuing a 15 day notice period.

Under National Resettlement and Rehabilitation policy, in addition to the compensation

applicable as per market values, an additional ex-gratia grant of minimum Rs. 20,000 has
to be paid per affected person.

7 Execution of Projects
The various modes of execution of highway projects are

Engineering, Procurement and Construction (EPC) mode: Under this mode projects are
funded entirely by Government of India through NHAI.

Build Operate and Transfer (BOT- Toll Based): A type of Public Private Partnership
(PPP) under which the Private firm is responsible to finance, construct, operate and
maintain the road stretch awarded to it. In return, the firm is entitled to collect toll during
the concession period.

Build Operate and Transfer (BOT- Annuity based):Under this mode, the responsibility to
finance, construct, operate and maintain lies with the private firm and the toll collection is
carried out by NHAI. In return, the private firm receives a fixed annual payment.

Of the above three modes, the later two come under Public Private Partnership (PPP) model
wherein which funds from private sector are used for highway development.
After the final approval of CCI and once the successful bidder is declared, the successful
bidder forms a Special Purpose Vehicle (SPV) for the execution of the project.

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The overall execution is monitored by NHAI directly or the NHAI appoints specific
consultants for monitoring and quality control.

Flow chart of establishment of Public Private Partnership (PPP) Projects in NHAI [5]

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8 Maintenance of National Highways [6]

In general the Central Government is responsible for the maintenance of National

Highways.

The Central Government may ask the State Government under which the NH section lies
to execute the maintenance work by providing them with adequate funds.

The Central Government has to power to enter into contract with any firm for the
maintenance work of National Highways by following general procedure.

In case of PPP model, the responsibility to maintain the National highways is vested upon
the concessionaire. The concessionaire has to do periodic maintenance work on the
stretch upto the end of the concession period.

A major challenge in NH maintenance is that the funds allocated for maintenance is a mere
40-50% of the actual requirement. This can be attributed to the cut-throat competition in road
network expansion by the alternate governments. The emphasis is primarily on construction
of new facilities. As a result the maintenance of highways takes a back seat.

References
1. NHDP Building World Class Highways, http://www.nhai.org/nhdpbulding.htm (August 6,
2016).
2. Report of the Core Group on Financing of National Highway Development Programme,
The Secretariat for the Committee on Infrastructure (Planning Commission), pp: 11.
3. Overview of the Bidding Process, http://www.nhai.org/biddingprocess.htm (August 6,
2016).
4. Sharma, V.K., and Chaudhary, T. (2009), Land Acquisition Process for National Highways,
India Infrastructure Report 2009 LandA Critical Resource For Infrastructure, pp: 62-65.
5. Report of the Comptroller and Auditor General of India on Implementation Of Public Private
Partnership Projects In National Highways Authority Of India, Performance Audit, Union
Government (Commercial) Ministry of Road Transport & Highways, Report No. 36, pp:22.
6. Responsibility for maintenance of National Highways, http://www.nhai.org/act1956.htm
(August 7, 2016)

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