Railways Minister Ashwini Vaishnaw has reiterated that India will not privatise railways. But, Railways has floated tenders inviting partners (private firms) for construction of wheel-making units. For Railways, the thrust going forward (in 2023) will be on exports – be it forged rail-wheels or rolling stock including high speed Vande Bharat coaches, besides focus on domestic market.
On the roads front, monetisation of road assets will be a key focus area for the Ministry of Roads and Highways (MoRTH) in 2023, with the government doubling down to reduce logistics cost to 9 per cent of GDP by end-2024 from the current 14 per cent. Aiming to expand the investor base, MoRTH is also encouraging small retail investors to put money in infra projects. However, the response has largely been lukewarm. Timely completion of projects and a larger investor base will be the key themes to watch out for next year.
In 2022, the Railways found success under its Make in India scheme as Vande Bharat trains gathered steam and popularity. At least six routes are operational and more are in the works, say officials aware of the matter. The Minister has announced that the Railways are now experimenting with new Vande Bharat trains — ones with sleeper coaches (called Vande Bharat), metro railway coaches (Vande Metro – to replaces coaches designed in 1950 and 1960s) — while plans are afoot to introduce Hydrogen-fuel powered trains around December 2023.
But, the Vande Bharat trains have not been without their share of controversy. Cattle hits and instances of run over have been reported which has not forced the Railways to announce construction of some 1000-kms of boundary walls on select routes at an estimated cost of ₹5,000 crore.
The transporter will be pushing for these new Vande Bharat designs in the export markets too.
In terms of track laying, 2023 will also be the year when Railways has set itself a target of laying 16 to 17 km of tracks a day as against the existing 12 km a day.
Export of wheels — particularly in European markets — will be another area of thrust.
ROADS SHRUG OFF PRICE RISE IN KEY MATERIALS
During the last five years, around 673 projects have been awarded through NHAI and another 1,871 approved for award by other implementing agencies. Of these, 840 projects have been completed up to November 2022. However, the slackened pace of execution has been an issue in the past couple of years largely on account of Covid and hardening prices of key input materials due to uncertainties arising out of global geo-political tensions.
Around 719 delayed NH projects have been identified across various states with project deadlines going beyond the scheduled completion date. Out of this, 268 projects have a delay of less than one year, while 438 projects are expected to be completed in FY23 ending March 2023. Delays have been because of above average monsoons, Covid, land acquisition, statutory clearances, financial crunch of concessionaires and poor performance of contractors.
Upcoming Lok Sabha elections could help push up construction activity too. The Centre has roughly 13 months to complete pending projects. For instance, in FY19 (Lok Sabha election year), NH construction stood at around 10,855 km, compared to 9,829 km in FY18.
“The Centre’s thrust on infrastructure projects, including the PM Gati Shakti plan is a significant step. Not only is it bringing in a paradigm shift in the construction industry by laying prominence on economic recovery, the sector is turning more competitive,” Aaditya Sharda, Co-founder, Infra.Market, said.
To address issues with liquidity of funds, the MoRTH has extended till March 2023 the order for lowering performance security and relaxing of payment norms. These were brought in to deal with Covid-induced cost implications.
MONETISATION PLANS
Timely completion of NH and other infrastructure projects is a crucial link in the government’s plan to monetise highways. So far in FY23, the government raised ₹14,268 crore. The NHAI has identified road projects of 1,750 km that it expects to be monetised through TOT (toll, operate, transfer) and InVIT in FY23.
Improving toll collection is also critical for faster monetisation of road assets through Investment trust (InVIT) and Toll Operator Transfer (ToT). The total toll collection at NHs stood at ₹34,535 crore in FY22, against ₹27,744 crore in FY21 and ₹26,851 crore in FY20. FASTag volumes grew 33 per cent y-o-y to 286 million, taking the total FASTag toll collections to ₹34,640 crore till November 2022.
The government is also working on reducing vehicle waiting time at toll plazas and has issued guidelines to design new fee plazas so as to ensure a service time of not more than 10 seconds per vehicle at peak flow.
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