Investments In Roads: Incentives, Issues And Mitigating Measures

India's 4.87 million km road network is second largest in the world and accounts for almost 80% of the passenger traffic and 60% of the freight traffic. The Government's intent in developing roads sector is evident from increased budgetary allocation of INR 64, 900 crores in 2017, a 12% increment from last year, and introduction of numerous fiscal incentives and legislative reforms.

Structuring of Public Private Partnership models

Traditionally, the PPP projects in roads were high risk and faced instances of delays and disputes related to land acquisition and environment. To mitigate these, NHAI has remodeled the model concession agreement to introduce the hybrid annuity model ("HAM"). In the earlier build-operate-transfer model, the concessionaire bore major part of project risk. Under HAM, 40% of the project cost is borne by the Government and 60% is funded by the developer. NHAI collects the revenue through toll, thereby absorbing the traffic risk, and the