Elections push highway construction in slow lane despite high capex

The nearly three-month-long election process slowed down the construction of highways in the first two months of fiscal year 2024-25 despite the Centre front-loading capital expenditure, showed data from the ministry of road transport and highways (MoRTH).

The highway construction fell by12% to 1,288 kilometres in April-May from 1,465km in the year-ago period, showed the data. Besides, the government awarded only one 4km road project during the two months, compared to road projects of 382 km a year ago “due to the imposition of the Model Code of Conduct”, the road ministry said in an office memorandum on Friday.

The restrictions came into effect on 16 March for the seven-phase general elections held from 19 April to 1 June. The results were announced on 4 June.

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High capital expenditure 

The ministry incurred a capex of ₹57,925 crore—42.55% of the total outlay of ₹1.36 trillion approved by parliament for the first five months of 2024-25 to keep the government running during the elections.

The interim budget 2024-25 had allocated ₹2.72 trillion for the highway ministry for the whole fiscal year. And in terms of annual allocation, the government has already spent 21.3% of the budget estimates compared to 20.83% in the year-ago period.

“This year we are moving even more quickly towards the allocation of budgetary capex funds for infrastructure development. About half of the vote on account capital outlay has been used in just two months and full sanctioned amount may be used much before the five-month period,” said an MoRTH official on the condition of anonymity.

This would ensure that highway construction picks up pace after the monsoon season, the official added.

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The ministry hasn’t finalized highway construction targets for the fiscal year yet but the official said it would be the same as last year, between 12,000km to 13,000km.

Highway construction target

To be sure, the ministry has completed many DPRs during the election period, which should result in a healthy project pipeline for the rest of the fiscal year.

“Typically, the trend in previous fiscal years has been that the pace of construction of highways picks up in the second half,” said Ashish Suman, partner, JSA Advocated & Solicitors.

In 2023-24, India built a total of 12,349 km of highways—the second highest in a fiscal year. The country constructed a record 13,327km of highways in the covid-affected fiscal year 2020-21.

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Moreover, the MoRTH exhausted its entire 2023-34 budget outlay for the first time, spending 99.93% of the revised capex of ₹2.64 trillion for 2023-24.

The ministry’s capex spending has remained over 90% over the last five fiscal years. In fact, it crossed 98% in three of the five years. Fiscal years 2019-20 and 2021-22 saw a fund utilization of 91% and 93%, respectively, according to the official.