Chennai: Around 13,000 km long road projects are expected to be executed in FY25. Ahead of elections, completion of road projects led to 20 per cent growth in the second half of FY24.
Execution of road projects is expected to grow at a slower pace by 5-8 per cent in FY25 to 12,500-13,000 km, finds ICRA. In 2024, projects had recorded a robust expansion of 20 per cent in FY24.
The awarding of new projects was significantly impacted in FY24 amid a delay in approval from the cabinet for the revised cost estimates of Bharatmala Pariyojana Phase 1. Consequently, the overall awards declined by 31 per cent to 8,551 km in FY24 from 12,375 km in FY23. A similar trend was seen in FY19 before the last General Elections, when the project awarding had declined by over 67 per cent.
Even in H1FY24, the execution of projects was impacted on account of the prolonged monsoon in certain geographies. This had a bearing on the number of productive days and resulted in muted growth during that period. However, things improved in the second half.
“The execution situation started improving from September 2023 with road construction witnessing a surge of 30 per cent in H2 FY24, enabling an overall growth of 20 per cent in FY24 to 12,349 km from 10,331 km in FY23, slightly higher than ICRA’s estimate of 12,000 km for that fiscal. This increase was supported by the Ministry’s focus on the completion of projects ahead of the general elections,” said Vinay Kumar G, Vice President and Sector Head - Corporate Ratings, ICRA.
The Ministry’s project award pipeline is above 45,000 km as of March 2024.
Among the awarded projects, the Hybrid Annuity Model (HAM) and Engineering, Procurement, and Construction (EPC) continue to dominate.
