Budget 2024: Road Ministry demands 25% hike in budget allocation to keep NHAI borrowings in check: Report | Mint
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Business News/ Budget / Budget Expectations/  Budget 2024: Road Ministry demands 25% hike in budget allocation to keep NHAI borrowings in check: Report
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Budget 2024: Road Ministry demands 25% hike in budget allocation to keep NHAI borrowings in check: Report

The Ministry of Road Transport and Highways in India has requested a budgetary allocation of ₹3.25 lakh crore for the fiscal year 2024-25 from the Ministry of Finance, which is a 25 percent increase compared to the previous year.

Ministry of Road Transport and Highways has requested a budgetary allocation of ₹3.25 lakh crore for the fiscal year 2024-25 from the Ministry of Finance. (Photo: Mint)Premium
Ministry of Road Transport and Highways has requested a budgetary allocation of 3.25 lakh crore for the fiscal year 2024-25 from the Ministry of Finance. (Photo: Mint)

The Ministry of Road Transport and Highways in India has requested a budgetary allocation of 3.25 lakh crore for the fiscal year 2024-25 from the Ministry of Finance, which is a 25 percent increase compared to the previous year, according to a report by Moneycontrol.

The government aims to maintain minimal market borrowings for the National Highways Authority of India in the upcoming financial year, government officials said.

"As part of the government’s strategy to recapitalise its (NHAI) balance sheet with higher budgetary support and zero market borrowings, we have asked for a 20-25 percent jump in Budget allocation needed in 2024-25," a senior government official said.

The Official further mentioned that following a comparatively subdued year marked by limited project awards due to state elections and the impending Lok Sabha elections, the government intends to substantially escalate project awards in the fiscal year 2024-25. This, in turn, is expected to enhance the capital expenditure outlay for the upcoming year.

"NHAI is likely to complete 2023-24 will market borrowing of less than 1,000 crore for the second straight year and going forward its market borrowing is expected to remain less than 1,000 crore for 2024-25 as well, after which its total debt will be in a comfortable spot," a second government official said.

The government has designated the National Highways Authority of India's (NHAI) internal and extra-budgetary resources (IEBR) as minimal for the fiscal year 2023-24. This implies that the NHAI does not intend to seek external borrowing to finance its capital expenditure.

For the second consecutive fiscal year, the Union Budget has allocated minimal market borrowing for the National Highways Authority of India (NHAI). Officials anticipate that NHAI's reliance on market borrowing will continue to be kept to a minimum in the fiscal year 2024-25.

As of January 2022, NHAI's debt had reached 3.44 lakh crore, a substantial increase from 24,188 crore in 2014-15, marking a 14-fold rise in less than seven years. The government now aims to curtail NHAI's debt to 1 lakh crore by the fiscal year 2024-25.

Furthermore, officials anticipate that approvals for the revised Bharatmata Phase-I program will likely be granted by 2024-25. This development is expected to catalyze the pace of project awards and construction activities in the upcoming fiscal year.

The pace of awarding projects under the Bharatmala Pariyojana scheme has decelerated in recent months following the identification of irregularities by the Comptroller and Auditor General (CAG) of India in the project awarding process in August.

The auditor's report on the implementation of Phase-I of Bharatmala Pariyojana highlighted deficiencies in the appraisal and approval mechanism presented to the Cabinet Committee on Economic Affairs (CCEA). Additionally, significant cost overruns were flagged in several high-cost Engineering Procurement and Construction (EPC) projects, including notable examples such as the construction of the Dwarka Expressway project and Delhi-Vadodara Expressway.

"Investors looking at the (roads) sector will eye 2024-25 as the year to set the pace of growth for the next five years, and after a slower-than-expected performance in the current financial year, the ministry is looking to boost both its construction and awarding target next years," the second government official said.

The ministry had initially intended to utilize over 90 percent of its 2.59 lakh crore capital expenditure (capex) allocation for the fiscal year 2023-24 by December 2023. However, officials note a significant deceleration in project awards since July, attributed to factors such as heavy rains, delays in land allocation, and ongoing elections in five states.

As of October 31, 2023, the Ministry of Road Transport and Highways (MoRTH) has expended approximately 1,66,157 crore in capex, resulting in the construction of around 4,450 km of national highways. However, project awards have been limited to only 2,595 km during the same period.

In comparison, during the corresponding period last year, the government successfully constructed approximately 4,060 km of national highways and awarded projects for 5,007 km.

Officials highlight that the impediments in land allocation, exacerbated by election-related delays and prolonged monsoons in certain regions, have disrupted the ministry's execution timeline.

"Despite a shorter time frame for awarding projects in 2023-24, we expect to surpass the road construction target of 12,500 km set last year," another government official said.

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Published: 04 Dec 2023, 06:08 PM IST
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