The Union cabinet on Tuesday approved a plan to build thousands of kilometres of roads and highways over the next five years at a cost of about Rs 7-lakh crore, an expected spending push that could help generate jobs and lift the economy.
The plan is to construct 83,000 km of roads, highways and bridges in phases. Under the first phase to be completed by 2022, some 24,800 km of roads will be built as part of the BharatMala programme, which was announced two years ago to build highways through economic corridors and border and coastal areas. Another 1,837 km of expressways will also be developed under the programme.
The project also includes the ongoing construction of 10,000km of national highways as well as 48,000 km of roads and highways, including those in the northeast and areas affected by a Maoist insurgency.
The government is looking to raise almost half the money from the market and private investments while the rest would come from its roads funds and highway toll.
The move comes at a time when growth in Asia’s third-largest economy has slowed to a three-year low of 5.7% in the quarter ended June, leaving many experts to call for an expansionary fiscal policy.
But ramping up government spending, at a time when subdued tax collections and sluggish economic growth have strained federal revenues, could widen the fiscal deficit beyond the targeted 3.2% of GDP.
There were already signs that the government had little option but to spend its way out of trouble that was exacerbated, in part, by last year’s shock withdrawal of high-value banknotes as well as disruptions ahead of the rollout of the new Goods and Services Tax.