The Indian government has announced plans to award $2.3bn worth of state-sponsored highway contracts in the next six months in a bid to boost the quality of infrastructure in the country. The country has previously operated under a system that saw private investors fund the construction of highways through bank loans, and recouped their investment over time from income generated from the roads, including toll fees. However the recent credit crunch has made it difficult for private builders to obtain loans, forcing a rethink of the strategy.

In the first six months of this financial year the government put 1,297km of highways up for auction, to be developed by private builders, but it only received bids on around 500km, according to the National Highways Authority of India Chief General Manager G. Suresh. The full year target is to build around 9,000km.

It has been estimated that India’s poor highway system costs the country $5.5bn annually, as millions of pounds of fresh produce rots in the heat of traffic jams on the way to markets. Local truck drivers claim is takes 65 hours to drive the 1,374km from Mumbai to Delhi, an average speed of 21km per hour.

The automobile industry expects that 3.5m new vehicles will hit Indian roads this year.