NHAI plan for taxable bonds to fund Bharatmala scheme worries govt

New Delhi: The finance ministry has flagged concerns over state-run National Highways Authority of India’s (NHAI’s) plan to float taxable bonds for the first time to raise Rs3,000 crore to finance the ambitious Bharatmala scheme for road construction.

The concerns range from the impact of these bonds on other instruments such as National Savings Certificates (NSC) to the quantum of the float. With the total investment for Bharatmala estimated at Rs10 trillion—the largest ever outlay for a government road construction scheme—transport minister Nitin Gadkari has been exploring ways to fund large infrastructure projects. The plan to float taxable bonds came after the Union budget failed to provide any budgetary assistance for Bharatmala.

“We had submitted our proposal to the finance ministry for approval and they raised a few issues. These are primarily if taxable bonds will impact other financial ministry instruments like NSC, etc., and what volume should be floated,” said a senior government official, seeking anonymity.

“The road ministry has been asked to study the impact of taxable bonds on other financial instruments and volume. Also, since the amount is Rs3,000 crore, will it require a cabinet approval or not?” the official said.

The total length to be developed as expressways under Bharatmala will be 51,000km. India plans to invest as much as Rs5.97 trillion in the current fiscal to bankroll its new integrated infrastructure programme, which involves building of roads, railways, waterways and airports. “We are waiting for final consent and the bonds will be floated once the clearance is given, although the target is current fiscal,” said the official, adding, “The total issues size for the first tranche is Rs3,000 crore. Bucket size and what would be price and rate of interest for individuals and corporate is yet to be finalized.”

Queries emailed to NHAI chairman Deepak Kumar on 19 February remained unanswered until press time.

With bank credit drying up for large projects, the transport ministry is exploring ways to raise Rs10 trillion.