As per media reports, the National Highway Authority of India (NHAI) has racked up debt of Rs1.78 lakh crore and contingent liability of at least twice that amount.
It means theoretically we are looking at about Rs5 lakh crore debt and contingent liabilities. The Prime Minister’s Office (PMO) has asked NHAI to stop building roads till the solution to funding problem is found. So, is it a cause for worry? How should we fix NHAI? The problems and issues with NHAI are multi-fold. In the next few articles we will dissect the problems facing NHAI, the causes and solutions to these problems. We will also analyse the fundamental problems with our transportation policy.
It is not Roads but Transportation that is important
Roads are but one piece of the transportation infrastructure. Ultimately, the objective of transportation is to move people and goods over long distances in a cost and time effective manner.
World Bank Indicator called logistic performance ondex (LPI) helps measures the effectiveness of transport infrastructure. It is the weighted average of the country scores on six dimensions: efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border control agencies; quality of trade and transport related infrastructure (e.g., ports, railroads, roads, and information technology); ease of arranging competitively priced shipments; competence and quality of logistics services (e.g., transport operators, and customs brokers); ability to track and trace consignments; timeliness of shipments in reaching destination within the scheduled or expected delivery time.
Germany is the top performer in LPI for 2018 with an overall score of 4.1/5. For comparison, India’s overall score was 3.18/5.
In general, developing countries like China and East Asian tigers hover at around 3.4 mark whereas developed countries are stacked around 4.0 mark.
In a nutshell we can deduce that at same level of infrastructure Germany is able to deliver much better value for logistics.
There are two important take-aways from this. First, no matter how many roads we construct, there is need for supporting soft infrastructure so that the benefits of better roads, railways and ports can evident.
Second, all the infrastructure needs to work in an interconnected manner. Thus, there must be effective feeder routes for cargo and people terminals in roads, railways, ports and airports. And the information support should also make transit easier.
Road Infrastructure has Two Roles
If we imagine transport network as series of hub and spokes, first role refers to trunk routes represent hub-to-hub transport and second role refers to last-mile routes representing the spokes.
In the first role, roads work as an alternative form of transportation between hubs.
These hubs can be connected by alternate modes of transport as well. However, India relies more on road transport for trunk haulage than other countries. Other countries use waterways (inland and coastal) and railways as main drivers.
To offset the trunk haulage part of the problem, NDA1, under prime minister Atal Bihari Vajpayee embarked on Golden Quadrilateral project. The project involved making highways connecting the four corners of the country AND two additional roads along the diagonals (East-West and North-South links). NHAI operates in this phase of the transportation network.
The last-mile road infrastructure helps all modes of transportation. Thus, you can go to another city by train or by air, but to reach your home, the final part of journey will be made by road. The same is case with goods. The goods may be moved by land (trucks), rail or ship or air, but their last mile journey will be made on road. Thus, last mile road infrastructure is most critical part of the puzzle.
How many roads do we have?
Indian road network density is about 1.8 km/ sq. km. For comparison sake, Germany is 1.8, France is at 1.51, UK is 1.64, China is 0.51 and United States is 0.70. For smaller city nation of Singapore, the density is 4.8 while dense Belgium has 5.0.
However, we must be careful in interpreting these numbers. The data simply says length of road. Ideally, lane-kilometres is a better measure. Reporting by various countries may have different units (i.e. km vs lane-km) and hence create discrepancy.
So, does India have more roads than we need?
Actually, no. Indian roads suffers from various shortcomings.
First, road network depends on density and dispersion of settlements. Thus, China where most of population is concentrated along the east coast can do with lesser road networks. In terms of geography, density and dispersion of population India is closer to European countries than to US or China.
Second, many of the roads, while technically roads, are not usable. Therefore, in many cases it was found that transporters prefer longer routes because they take less time.
Third, Indian efficiency of connectivity is not high. In many cases, the last mile connectivity is missing or grossly inadequate. Ideally, municipal corporations should be developing these roads. However, central government has decided to build some of them under the Bharatmala project.
Finally, there are several design inconsistencies. For example, on a single highway, the number of constructed lanes itself and the number of lanes available for traffic keeps changing. To add to that, the changes are abrupt creating choke points.
There are inadequate shoulder lanes for breakdowns, not enough buffer zones at turning points etc.
We need more road projects
Despite the number of roads already existing, we need more roads. A large part of this requirement will come from improving old-existing roads, widening them, adding services along the roads. Some additional hub-to-hub connections will have to be established. In that sense, Bharatmala project is a welcome initiative.
We need to bring a more practical perspective to the road infrastructure. It isn’t about simply paving the roads. The number of services needed to support modern road infrastructure is numerous. If we have to improve our performance on LPI index itself, we need to upgrade customs infrastructure, port infrastructure, operator training etc. These, while not directly under the purview of NHAI or road development body, are essential pieces of puzzle.
In the next article we will discuss how to manage road projects the right way.
(Rahul Prakash Deodhar is a private investor and Advocate, Bombay High Court. He can be reached at rahuld[email protected], on twitter at @rahuldeodhar or at his website www.rahuldeodhar.com