Firmly poised to achieve its ambitious targets on road construction, the ministry of road transport and
highways will ask for budgetary allocation of R91,000 crore for 2017-18, up 57% from the current year’s outlay, which the ministry is set to overshoot by about R4,500 crore.
Road transport and highways minister Nitin Gadkari has set ambitious targets of awarding highway projects of 25,000 km and building 15,000-km long roads during 2016-17.
Though the achievement so far remains way lower than the targets, ministry officials insist that the targets would be met. The targets for next year have not been fixed so far.
Gadkari has repeatedly said highway construction won’t be hit by paucity of funds even as it is obvious that private developers and banks remain wary of the sector despite government incentives.
Most projects that are currently being implemented are in the conventional engineering, procurement and construction (EPC) category, which are fully funded by the government. This makes budget allocations and borrowings by the government for road projects all the more critical.
While NHAI, through which a sizeable portion of highway projects are implemented, has been allowed to borrow R59,000 crore in the current fiscal, it has so far borrowed only R12,000 crore.
Apart from its share of the budget outlay for the ministry and borrowings (from LIC and EPFO and via taxable and tax-free bonds), the NHAI has other means to mobilise funds: toll revenue and a part of road cess proceeds. NHAI chairman Raghav Chandra said the authority will borrow more funds as and when required.
On its part, the government is looking at unconventional ways of raising funds for road construction; it, for instance, is set to offer 75 existing toll-able projects on lease to private players, including global funds with patient capital with the aim of raising up to R60,000 crore over the next six months.
The minister is also planning to set up a dedicated funding agency in the state sector for highways and ports — sectors it believes would witness investments of R10 lakh crore and R15 lakh crore respectively, in the “medium term”.
Sources said the road ministry would also seek permission to allow NHAI to borrow up to R59,000 crore from the markets for the 2017-18 fiscal as well.