Masonry Ratings: Road Construction to Pick Up Pace of Fiscal Year Thanks to Government Initiatives: Report

Road construction will accelerate in the current fiscal year due to various government initiatives such as the National Infrastructure Pipeline and the National Monetization Pipeline, Brickwork Ratings (BWR) announced Thursday. With the government changing the hybrid annuity model, it expects the changes to generate more private sector interest and HAM’s share to increase in the future, the rating agency said.

“Going forward, in FY 22, Brickwork Ratings (BWR) expects road construction to accelerate due to various government initiatives in this sector such as the National Infrastructure Pipeline (NIP), the National Monetization Pipeline (NMP), Bharatmala Pariyojana, the changes in the Hybrid Annuity Model (HAM) and the rapid pace of asset monetization, ”he said.

Brickwork Ratings further noted that to close the financing gap in the sector, more innovative means of financing are needed at the moment.

“The Infrastructure Investment Trust (InvIT) and Toll Operate Transfer (TOT) model have the potential to raise funds through asset monetization,” he added.

However, the rating agency said that due to the challenges of the pandemic, the InvIT and TOT models have not resumed, and progress on this front will be key to closing the funding gap in the sector.

According to Brickwork Ratings, India’s road network is the second in the world, with a length of approximately 63.86 lakh km.

The outbreak of the virus towards the end of FY20 created panic around the world, resulting in the temporary suspension of economic activity, he said.

The rating agency pointed out that the roads sector in the first quarter of FY21 suffered a major setback during the initial foreclosure, causing commercial operation dates to be delayed by three to six months for most projects.

However, he said, once the lockdown was gradually lifted, it accelerated in terms of construction, project allocation and toll collection.