As elevated crude prices have increased the chances of a reduction in cess on petrol — sooner or later during FY23, the government may find it difficult to provide the estimated Rs 1.34 trillion budgetary support (BE) to the National Highways Authority of India (NHAI) for the current fiscal, analysts say.

The budget support to NHAI in FY23 is up 106% over Rs 65,100 crore in FY22 (revised estimate).

The biggest chunk of the budget outlay – as much as Rs 1 trillion — to NHAI this fiscal has been estimated to come from the central road and infrastructure fund (CRIF) into which cess on petrol and diesel flows. The balance is proposed to be raised via toll receipts (Rs 13,900 crore) and monetisation (Rs 20,000 crore) respectively.

Breaking away from the earlier practice, the government has decided to provide the entire funds to the NHAI from budgetary support without requiring the authority to resort to borrowings as NHAI’s debt kept on mounting. It rose about 15 times in eight years to stand at Rs 3.5 trillion, as of March 22. In both FY21 and FY22, NHAI borrowed Rs 65,000 crore each.

“For FY23, the overall road budget outlay has edged up by 1% year-on-year (YoY), and in light of higher crude prices, it needs to be seen whether the projected contribution from cess funds can materialise,” brokerage firm Edelweiss said.

Any disruption in the fund supply may adversely impact NHAI’s 4,500 km highway project construction plan for the current fiscal.
Sources in the authority said NHAI constructed a 4,250 km highway in FY22, marginally up from 4,218 km in FY21. Edelweiss said NHAI awarded around 4,970 km of highway projects worth around Rs 1.4 trillion in FY22, up from 4,818 km worth Rs 1.3 trillion in FY21.

Debt servicing is already is a huge burden for NHAI. As reported by FE earlier, a little less than 1 out of every 5 expenditures by the NHAI in 2022-23 will go towards debt servicing.

According to the estimates of the ministry of road transport and Highway (MoRTH) presented to a parliamentary standing committee, NHAI has to spend Rs 31,049 crore on servicing debt in 2022-23. The amount will go up a little to Rs 31,735 crore in 2023-24. n 2021-22, NHAI is likely to have spent Rs 40,337 crore on debt servicing.