1. Infrastructure – road building: 12% hike in budgetary allocation to give highway construction a boost

Infrastructure – road building: 12% hike in budgetary allocation to give highway construction a boost

The 12% jump in budgetary allocation is expected to give the highways sector a boost

By: | New Delhi | Published: February 6, 2017 2:36 AM
The ministry plans to utilise up to R23,892 crore for executing highway projects under the National Highways Development Programme (NHDP) and another R21,544 crore for other National Highway projects. The ministry plans to utilise up to R23,892 crore for executing highway projects under the National Highways Development Programme (NHDP) and another R21,544 crore for other National Highway projects.

While highway construction clocked 17 km/day in 9MFY17, less than half the target rate of 41 km/day set by Union Surface Transport and Highways Minister Nitin Gadkari, the Union Budget hiking allocation for the sector by R7,000 crore is expected to boost the sector.

Finance Minister Arun Jaitley stepped up allocation for highways by 12% to R64,900 crore from the BE of R57,976 crore in 2016-17, even as he kept the allocation under the Pradhan Mantri Gram Sadak Yojana unchanged at R27,000 crore. Of the total R64,990 crore, R46,907 crore is to come from the Central Road Fund, R8,500 crore from toll revenue and R9,493 crore as additional budgetary support, ministry sources say.

Rating agency Crisil says the rise in budgetary allocation would be positive for the highways sector and also spur demand for cement and steel, among others. The R57,976 crore allocated for the sector in the current fiscal had represented a huge jump over the R34,345 crore (BE) allocated in 2014-15 and R45,741 crore (BE) in 2015-16.

“The increase in budgetary allocation for roads and highways to R64,000 crore from R57,976 crore and the earmarking of R27,000 crore for rural roads is welcome, as this will help improve infrastructure. However, the stress should be on constructing roads with safety features,” says K K Kapila, chairman of the Geneva-based International Road Federation (IRF).

“A big infrastructure push along with a substantial hike in provisions for National Highways is a major takeaway from the Budget,” says Arun Lakhani, CMD, Vishvaraj Infrastructure Ltd.

Ashoka Buildcon’s MD Satish Parakh says a higher allocation for National Highways and a provision of R2,000 crore for highways adjacent to the coastline are encouraging for the industry.

The ministry plans to utilise up to R23,892 crore for executing highway projects under the National Highways Development Programme (NHDP) and another R21,544 crore for other National Highway projects. It plans to use R5,765 crore as capital outlay for roads in the North-East region. It has proposed to spend R7,268 crore on development of state roads (other than rural roads).

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While fund allocation for the Sagarmala project has seen a paltry hike, from R406 crore in 2016-17 to R600 crore now, Jaitley said 2,000 km of coastal connectivity roads had been identified for construction and development. A new and restructured central scheme with focus on export infrastructure would also be launched in 2017-18, he announced.

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Minister Gadkari had set an ambitious target of constructing 15,000 km of highways in the current fiscal. This was 2.5 times what was accomplished last year. Though construction till December-end of the current fiscal stood at just 4,625 km, Gadkari holds that highway construction might touch 30 km/day in the current fiscal. Apart from the continued torpor in private investments — BOT projects have barely kicked off and the hybrid annuity model that mitigates developers’ risk too has seen only moderate success — over-optimistic targets were to blame for the slippage, analysts say.

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