Syllabus: General Studies Paper 3 (Indian Economy)
Road connectivity is important for a country’s progress. Discuss. Explain Hybrid Annuity Model in this context. ( 10 Marks)
Road connectivity is one of the important factors for a country’s progress. The Indian road network, comprising of National Highways, Expressways, State Highways, Major District Roads, Other District Roads and Village Roads, is globally the 2nd largest spanning 5.5 million kilometres. Although India has a large and diverse road network with its own share of challenges, they can be overcome by energy-efficient technologies and customer-focussed approach.
Need for Road Connectivity:
1. Roads provide better access to services, ease of transportation and freedom of movement to
2. It provides a reliable and swift road network in the country and has a major role in
influencing its economic development.
3. It enables nearest drop and pickup due to the ease with which road network can span across
4. It is easy to connect roads with other modes of transport due to their last mile connectivity
1. Challenging terrain in hilly areas and along rivers
2. Poor financial management due to largely public ownership
3. Poor technology practices in construction of roads leading to frequent maintenance and
4. Problems in land acquisition
5. Lack of integrated planning of roads across the country leads to wastage of resources and
delays in execution
Hybrid annuity model :-
- HAM is a mix between the existing two models – BOT Annuity and EPC. As per the design, the government will contribute to 40% of the project cost in the first five years through annual payments (annuity). The remaining payment will be made on the basis of the assets created and the performance of the developer.
- There is no toll right for the developer. Under HAM, Revenue collection would be the responsibility of the National Highways Authority of India (NHAI).
- Advantage is HAM is a good trade-off, spreading the risk between developers and the Government. Here, the government pitches in to finance 40 per cent of the project cost which is a sort of viability-gap funding. This helps cut the overall debt and improves project returns.
- Funding is becoming a challenging task for road developers.
- The model can be made better with steps such as efficient dispute redressal mechanism, faster environmental clearances etc.
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