According to official estimates, the 7,000-km highways project will require an investment of about Rs 28,000 crore, though unofficial estimates have pegged the cost much higher.

Financial institutions have already rejected the traffic flow estimates for some other highway projects that have come up for due diligence. The institutions believe that projected traffic flow may fall short owing to the ongoing industrial downturn. A shortfall in traffic flow would mean that the project may not be in a position to support debt-service payments on its own and will have to get additional support mechanisms in place, including traffic guarantees.

The government is exploring the possibility of utilising a part of the ResurgentIndia Bond (RIB) proceeds for the development of its highways project. The RIB proceeds will, however, be only one of the many sources of funding for the government and other routes are still being explored.

On January 2, prime minister Atal Behari Vajpayee marked the start of the ambitious highway project to link the entire country and said his government would seek funds from local and foreign investors. "It is the longest, hardest and the most ambitious infrastructure project undertaken in independent India," said Vajpayee while inaugurating the project in Bangalore. The project is expected to be completed within a decade. "We will actively seek participation from the Indian private sector and foreign investors in this project," said the prime minister. The early stages of the project, which involve a road from Bangalore to neighbouring Tamil Nadu, are being funded by a loan from the Manila-based Asian Development Bank (ADB). India's annual requirement of funds for deployment towards infrastructuredevelopment is estimated to be around Rs 1,06,000 crore.

In December, the centre decided to merge the 7,000-km cross-country highway with the ongoing programme for multi-laning existing highways connecting the country's four metros. The new merged proposal, according to officials at the ministry of surface transport, will make the new proposed highway network a lot more economical than the one proposed by the prime minister at his Ficci meeting in October.