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Golden Quadrilateral-En Route to India's Economic Growth

Reviewing the Accomplishments

"…It is not wealth that Built the roads but, Roads that built our Wealth," by John F. Kennedy is appositely suitable for one of the India's most talked about projects- Golden Quadrilateral, which is also the largest highway project in India and the fifth longest in the world, started by NDA Government led by then Prime Minister Atal Bihari Vajpayee.

An efficient road network is essential for a large country like India to maintain national integration and socio-economic development. India has a large network of highways maintained by the National Highway Authority of India (NHAI), under the Ministry of Road, Transport and Highways. Road transport is the principal mode of movement of goods and people in India, accounting for 65% of freight movement and 80% of passenger traffic. While national highways constitute about 1.7% of the road network, they carry more than 40% of the total traffic volume.

Present Scenario

India's, road network is the second largest in the world. Hence road is a main mode of transport for goods as well as people in our country. To improve the connectivity between major towns and cities, national highways, state highways and expressways are constructed. This development has tremendously boosted the infrastructure of India through Golden Quadrilateral, which is India's grandstand infrastructure project that takes our country on the road to success.

The main benefit of this Golden Quadrilateral highway is smooth flow of traffic. It not only establishes a quicker transport network between major cities and ports but allows a smoother movement of goods and passengers within the country. Also, it facilitates job and industrial development in smaller towns and allows identifying locations for commencing industrial activities. The ease of trasporation on Golden Quadrilateral has aided in decreasing the vehicle operating costs and time. Finally, it has encouraged the economic growth directly and indirectly through construction or demand for steel, cement and other construction materials.

GQ upgrades have increased the number of new entries the most in high- and medium-density districts that lie 0-10km from the GQ network. For instance, moderate-density districts – like Surat in Gujarat or Srikakulam in Andhra Pradesh that lie on the GQ highway – registered an increase in new output and new establishment counts of more than 100% after GQ upgrades. On the other hand, the GQ upgrades are not linked to heightened entry or performance in low-density areas. These results suggest that the improved connectivity enables manufacturing establishments to efficiently locate in cities with medium population density, but that agglomeration economies prevalent for the sector discourage entry in low-density places. - See more at:

The subsequent phases of National Highways Development Projects (NHDP) have been delayed mainly due to land acquisition, utility shifting, non availability of soil/ aggregates, poor performance of contractors, environment/forest/wildlife clearance, ROB & RUB issue with Railways, public agitation for additional facilities, arbitration/contractual disputes with contractors etc.

To expedite completion of these projects various steps have been taken which include streamlining of land acquisition, streamlining of environment clearances, exit for equity investors, premium re-schedulement, securitization of road sector loans, close coordination with other Ministries, revamping of dispute resolution mechanism, frequent reviews at various levels etc. NHAI has decided not to award projects till all pre-construction approvals are in-place for the project to avoid post bid delays and litigations, according to Ministry of Road Transport and Highways.

To meet its transportation needs, India launched its National Highways Development Project (NHDP) in 2001. This project, the largest highway project ever undertaken by India, aimed at improving the Golden Quadrilateral (GQ) network, the North-South and East-West (NS-EW) Corridors, Port Connectivity, and other projects in several phases. The total length of national highways planned to be upgraded (i.e., strengthened and expanded to four lanes) under the NHDP was 13,494 km; the NHDP also sought to build 1,500 km of new expressways with six or more lanes and 1,000 km of other new national highways, including road connectivity to the major ports in the country. Thus, in a majority of cases, the NHDP sought to upgrade a basic infrastructure that existed, rather than build infrastructure where none previously existed.

The Mumbai-Pune Expressway, the first controlled-access toll road to be built in India is a part of the Golden Quadrilateral Project though not funded by NHAI, and separate from the main highway. Infrastructure Leasing & Financial Services (IL&FS) has been one of the major contributors to the infrastructural development activity in the Golden Quadrilateral project.

The NHDP has evolved to include seven different phases. NHDP Phase I was approved in December 2000 at an estimated cost of Rs 30,300 crore. This phase was planned to improve 5,846 km of the Golden Quadrilateral network, 981 km of NS-EW, 356 km of Port Connectivity, and 315 km of other national highways, for a total improvement of 7,498 km. Phase II was approved in December 2003 at an estimated cost of Rs 34,339 crore. This phase planned to improve 6,161 km of NS-EW and 486 km of other national highways, for a total improvement of 6,647 km. About 442 km length of highway is common between Golden Quadrilateral and NS-EW.

The Golden Quadrilateral network, totaling a length of 5,846 km, connects the four major cities of Delhi, Mumbai, Chennai, and Kolkata. Beyond the four major cities that the Golden Quadrilateral network connects, the highway touches many smaller cities like Dhanbad in Bihar, Chittaurgarh in Rajasthan, and Guntur in Andhra Pradesh. The Golden Quadrilateral upgrades began in 2001, with a target completion date of 2004. To complete the Golden Quadrilateral upgrades, 128 separate contracts were awarded. In total, 23% of the work was completed by the end of 2002, 80% by the end of 2004, 95% by the end of 2006, and 98% by the end of 2010. Differences in completion points were due to initial delays in awarding contracts, land acquisition and zoning challenges, funding delays and related contractual problems. Some have also observed that India's construction sector was not fully prepared for a project of this scope. As of August 2011, the cost of the Golden Quadrilateral upgrades was about US$6 billion about half of the initial estimates.

The NS-EW network is an aggregate span of 7,300 km, which connects Srinagar in the north to Kanyakumari in the south, and Silchar in the east to Porbandar in the west. The NS-EW upgrades were initially planned to begin in Phase I of NHDP along with the Golden Quadrilateral upgrades. The scope of the first phase of upgrades was smaller at 981 km, or 13% of the total network, with the remainder originally planned to be completed by 2007. However, work on the NS-EW corridor was pushed into Phase II and later, due to issues with land acquisition, zoning permits, and similar. In total, 2% of the work was completed by the end of 2002, 4% by the end of 2004, and 10% by the end of 2006. These figures include the overlapping portions with the GQ network that represent about 40% of the NS-EW progress by 2006. Since then, the planned upgrades for the NS-EW have expanded substantially. As of January 2012, 5,945 of the 7,300 km in the project have been completed, at an estimated cost of US$12 billion.

Connecting India's Main Cities

The Golden Quadrilateral project is phase one of the NHDP. It establishes transportation links between major cities of India, such as New Delhi, Jaipur (Rajasthan), Gandhinagar (Gujarat), Mumbai and Pune (Maharashtra), Bangalore (Karnataka), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh), Bhubaneswar (Orissa), Kolkata (West Bengal) and Kanpur (Uttar Pradesh). The Golden Quadrilateral has four sections. Section I is a 1,454km stretch of National Highway 2 (NH2) from Delhi to Kolkata. It runs through Delhi, Haryana, Uttar Pradesh, Bihar, Jharkhand and West Bengal. It connects major cities in these states, such as Delhi, Faridabad, Mathura, Agra, Firozabad, Kanpur, Allahabad and Varanasi.

Section II is a 1,684km stretch from Kolkata to Chennai. It consists of NH6 (Kolkata to Kharagpur), NH60 (Kharagpur to Balasore) and NH5 (Balasore to Chennai). It passes through the states of West Bengal, Orissa, Andhra Pradesh and Tamil Nadu.

Section III is a 1,290km stretch from Chennai to Mumbai. It constitutes parts of NH4 (Mumbai to Bangalore), NH7 (Bangalore to Krishnagiri, Tamil Nadu) and NH46 (Krishnagiri to nearby Chennai). It passes through Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu.

Section IV is a 1,419km stretch between Mumbai and Chennai. It constitutes parts of NH 8 (Delhi to Kishangarh), NH 79A (Ajmer bypass), NH 79 (Nasirabad to Chittaurgarh) and NH 76 (Chittaurgarh to Udaipur). It passes through the states of Maharashtra, Gujarat, Rajasthan, Haryana and New Delhi. It connects major cities which include Delhi, Gurgaon, Jaipur, Ajmer, Udaipur, Gandhinagar, Ahmedabad, Vadodara, Surat and Mumbai.

Planning and Construction

The planning for the Golden Quadrilateral project was completed in 1999. It included construction of a few new express highways and extension of the existing road to four or six lanes. The project was officially started in 2001. It was planned for completion by 2006, but land acquisition issues and renegotiations with contractors delayed the progress of the project. The project was almost complete by January 2012, with a few smaller sections being renovated.

Contractors and Financing

Being a huge project, the construction of the Golden Quadrilateral was divided into several sections based on the state provinces. Construction contracts for each section were individually awarded. Major contractors involved in the project are Larsen & Toubro, LG Engg. & Construction, Nagarjuna Construction, Consortium of GVK International and BSCPL, IRCON International, Punj Lloyd, Progressive Construction, ECSB-JSRC, B. Seenaiah & Co., Madhucon Projects, Sadbhav Engg., KMC Construction, Gujarat Public Works Department, SKEC - Dodsal, MSRDC, Mumbai, Skanska Cementation India, Hindustan Construction Company, RBM - PATI, Unitech, CIDBI Malaysia and PATI - BEL.

The financing for the project is obtained from the taxes on petrol and diesel, which accounts to Rs.200bn through external assistance, Rs.100bn from market borrowings and Rs. 40bn from private sector participation. The project has been executed through a Public Private Partnership (PPP) between the NHAI and the corresponding contractors. The contractors will collect the toll taxes for a specified concession period.

Future plans

Some sections between key areas on the highways NH2, NH5 and NH8 of the Golden Quadrilateral are planned to be extended to six lanes to make it an expressway and ensure smooth flow of traffic. The extension will be done on a design, finance, build and operate basis.

In September 2011, infrastructure group GMR won Rs. 72bn ($1.4bn) contract from the NHAI to widen the 555km Kishangarh-Udaipur-Ahmedabad highway from four lanes to six. The section forms part of the Delhi-Mumbai Golden Quadrilateral corridor. The company will construct about 3,336 lane kilometres and operate the highway for 26 years under the design, finance, build and operate concession.

The benefits of the GQ are manifold including better movement of products and people, more choice of locations for initiating industrial activity, reduced wastage for the agriculture sector, and a decrease in vehicle operating costs and time. Better quality roads can carry more loads. So instead of pygmy trucks (up to 10 tonnes of capacity), transporters can use multi-axle trucks. This reduces overall costs as they could transport more goods at a marginal higher cost. Also, the fleet goes through less wear and tear. This translates into more predictability for buyers and suppliers.

Feedback Infra, an Integrated Infrastructure Services Company had conducted a study in 2012 on National Highway 5, which connects Kolkata and Chennai, to find out the economic impact of the project on the Bhilai and Rourkela factories of state-run Steel Authority of India. These plants are located on the periphery of the GQ network. Both plants import coking coal from Haldia and Vizag ports. After the Golden Quadrilateral upgrade, not only has the transportation time reduced to half but costs were also curtailed by some 15%, according to Feedback Infra.

Besides giving a boost to the economy, with the execution of the project NHAI has emerged as the nodal agency for developing highways. NHAI, which began operations in 1995, was a dormant body until the end of 1990s when all national highways were directly managed by the Ministry of Road Transport and Highways. After the Golden Quadrilateral project, NHAI has taken up six more highway projects. Today, around 55,000 kms of highways come under the agency's control.

The project's benefits, however, have come late in the day. The initial completion date for the GQ project was December 2003. But the project got delayed due to problems in acquiring land, arranging funds and awarding contracts. There was no cost overrun, though. The project cost is Rs.32,492 crore, which is slightly less than the Rs.34,300 crore estimated in 2005.

Conclusions

The Golden Quadrilateral highway project of India upgraded the quality and width of 5,846 km of highways linking four major hubs in India. In the process, this upgrade improved the connectivity and market accessibility of districts lying close to the highway compared to those more removed. Non-nodal districts located within 0-10 km from the GQ network experienced substantial increases in entry levels and higher productivity. Dynamic specifications and comparisons to the NS-EW highway system mostly confirm these conclusions, with the most substantial caveat being that the productivity gains may be upwardly biased by a pre-period dip.

The Golden Quadrilaterall upgrades also appear to have facilitated a more natural sorting of industries that are land and building intensive from the nodal districts into the periphery locations; the upgrades also appear to be encouraging decentralization by making intermediate cities more attractive for manufacturing entrants.

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Fast Facts

January 2012, Government declares the highway project complete

Highway connecting four metropolitan areas in India- Delhi, Mumbai, Chennai, Kolkata

3600 mi (5,846 km) long (four and six lane express highways)

2% of the country's infrastructure and 40% of the total national traffic 65% of the India's goods are transported along the highway

Establishes a faster, more accessible transportation route between cities

Provides routes for small farmers to reach larger markets

Provides an impetus to smoother movement of products and people within India

Enables industrial and job development in smaller towns through access to markets

Providing opportunities for farmers, through better transportation of produce from the agricultural hinterland to major cities and ports for export, through lesser wastage and spoils