Paving past the pandemic, regardless of brief aberrations

Last fiscal, the national highways sector thumbed nose at Covid-19 and delivered a stellar performance, riding on higher project awards, record construction, and traffic that surpassed pre-pandemic levels once the lockdowns were lifted in the second half. Though the second wave of infections has dampened this momentum, it may not have a material bearing on growth for the current fiscal.

Lower National Highway (NH) awards of only 311 km in April 2021 is unlikely to deter the government from awarding more projects for the full fiscal as ramp-up typically occurs in the fourth quarter. A decline in national highway construction to 853 km in April from the peak of 2,189 km in March may seem like a 61% nosedive. But this translates into a decent pace of 28 km per day, or 4x times faster than the April 2020 levels, despite endemic labour shortage. Road engineering, procurement and construction (EPC) contractors also have learnings from the first wave so scaling up can happen once the economy opens up again, just the way it did last fiscal.

The less-stringent, localised lockdowns this time around have had a softer impact on national highway traffic, which saw only a 15% decline in April, on-month. This was supported by the implementation of FASTag, which eliminated toll leakages.