Profits at next exit

Profits at next exit

National highways seem to be emerging as the yellow brick road to profits. When the government invited private companies to build roads, it also tried to sweeten deals. The belief was that few could make money laying out ribbons of tar across the length and breadth of India.

One sweetener was the concept of viability gap funding—a subsidy that helped private road operators to leap from losses to profits. The National Highways Authority of India (NHAI) has provided this subsidy?since 2001-02. So far, it has given Rs2,072 crore to private road operators.

But the new annual report of the Reserve Bank of India also tells us another fact. That there have been cases of negative subsidy—when private companies have paid NHAI to grab a road deal. The amount paid by them to the government agency is Rs1,900 crore.

Clearly, many private road companies pay to get the rights to arterial roads. They wouldn’t do it unless they were expecting huge profits.