Mumbai, Apr 21 (PTI) Domestic rating agency Crisil on Tuesday said it is "essential" to revive the pace of highway awarding and highlighted that the sluggish pace of road awarding has been primarily driven by a lack of encumbrance-free land and a prolonged approval process.
Pointing out that capital availability is healthy with both budgetary allocations and possibilities of monetisation, Crisil, in a report, said the "awarding was impacted by non-availability of encumbrance-free land and elongated approval process."
Around a month back, Union Roads Minister Nitin Gadkari had called the slow pace of spending on road projects a "problem" and underlined that higher spending has the potential to boost the economic growth of the country as well.
Crisil said road developers will be adversely impacted by the slow pace of awards as their order books get impacted, and added that this will restrict their growth as well.
Awarding in the road sector, which was over 12,000 kilometers in FY23, came down to below 8,000 km in FY25. Execution witnessed an uptick in FY24, but has since reduced gradually, the Crisil report said.
It pegged the estimated awarding of road projects in FY26 at below 8,000 km, while the execution has been higher than that.
A gradual revival is expected in project awarding in the road sector post slowdown of the last few years on the back of healthy budgetary allocation as well as efforts taken by the government to debottleneck the approval processes, it said.
The agency said asset monetisation is expected to gain further momentum, with Rs 70,000-80,000 crore worth of assets estimated to be monetised by the National Highways Authority of India to fund the growth, the report said.
Meanwhile, budgetary allocation for the Ministry of Road Transport & Highways (MoRTH) Government of India remains healthy with a 12 per cent compound annual growth rate (CAGR) between FY21 and FY26. The budget estimate for FY27 stood at 2.9 lakh crore. This is supported by budgetary allocation and focus on monetisation by the government.
On smart meters in electricity distribution, the report said that the execution may face delays due to right-of-way issues and lower-than-anticipated consumer acceptance.
The report added that among new-age sectors, data centres and smart meters exhibit greater bankability due to their relatively more mature business models and higher track records, while battery manufacturing and green hydrogen will require policy support given the relatively early stage of their evolution.
Overall investment growth in the key infrastructure segment is seen at 45-50 per cent over the next two financial years, to Rs 23-24 lakh crore, benefiting from strong government policy support and domestic demand. The rise is expected despite the West Asia conflict and global uncertainties.
Krishnan Sitaraman, chief ratings officer, Crisil Ratings, said that while key infrastructure sectors are largely insulated from the direct impact of the West Asia conflict, they do face indirect inflationary pressure if the conflict prolongs.