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It’s worrying what’s happening to our highway construction targets and achievements 🙏🙏 In first 8 months of FY25, Govt spent just 55% of the Rs 2.72L crore capex targetted for the roads and highways sector. With just four months left, hitting the full target is impossible. And sadly, most people are simply pinning things on elections earlier this year. There is a much deeper problem why the slowdown has been so serious. Let me explain! .. Three most cited reasons: 1> Delay in land acquisition for new highway projects 2> The general elections also played a role, with the model code of conduct and political activities halting new project tendering for about 6 months. This meant fewer new projects got off the ground 3> Plus, post-election, the Modi Govt unofficially ended its delay and cost-inflation-ridden flagship highway project - Bharatmala Thus, the focus was reduced to projects already underway, neglecting new tenders which are crucial for sustained growth 🙏🙏 .. But, the biggest factor was born during COVID, when the Govt had to increase the borrowing and drive up the fiscal deficit. And in a bid to bring that down aggressively, it has made a big shift in how it builds highways. -> There is a clear shift from EPC tenders where Govt spends all of the money required, towards hybrid annuity models (HAM) and build-operate-transfer (BOT) tenders -> Thus, Govt is contributing less or nothing, while tender winners do much or all the investment, to build & operate the highway. And, these models also naturally have less predictable earnings -> Thus, the interest from the pvt sector for fresh projects has been lukewarm. This is also why all the big highway deals we have been hearing from the pvt sector involve already built-up roads Also, much of small & mid-sized construction companies find themselves unable to take up these projects, given much higher investment 🙏🙏 Outcome? Fewer new projects are taking off. .. Now, think this way: This is resulting in less highway building and fewer opportunities for construction firms, impacting employment and related industries. And construction of roads and highways being one of the highest economic multiplier generators. Thus, the domino effect on consumer spending and growth is big. Thus, a grim affair. .. I hope that the last 4 months will see increased activity. However, this won't compensate for the overall shortfall. Perhaps, the Govt should also revisit the EPC model for certain projects to ensure steady infra-building. If not addressed, this trend could deepen the economic slowdown by affecting logistics, commerce, and employment across the nation, as we are already witnessing. ..