Home / News / India /  Govt puts leash on NHAI’s borrowings

New Delhi: The government has directed the National Highways Authority of India (NHAI) to continue on the path of fiscal consolidation and keep borrowings to the minimum over the next three years in an attempt to stop its debt ballooning to unsustainable levels.Accordingly, the union budget for 2023-24 has not made any provision for borrowings by the highway developer while increasing its allocation for building roads, highways and bridges to a record 1.62 trillion from 1.41 trillion in the previous fiscal.

Even last year, budgetary support to NHAI was kept at a higher level to stop it from going to the market for resources. Since 2014-15, the highway developer’s debt has increased 14 times from 24,188 crore to about 3.48 trillion at the end of FY22.

The government aims to reduce it by 1 trillion by 2024-25 and so a moratorium has been put on NHAI for market borrowings.

The moratorium on borrowings in the first year (FY23) has already borne results with an India Ratings and Research (Ind-Ra) study suggesting that FY23 is the first year in more than a decade when the NHAI’s debt started witnessing a year-on-year contraction. Post the substantial increase in allocation along with minimal dependence on market borrowings, the debt at NHAI fell to a level of 3.44 trillion as of 30 September 2022. “High debt with NHAI is a concern, but there are no issues on the solvency of the highway developer,“ said a person aware of the move to put a cap on NHAI borrowings. “Debt has been taken only on bankable projects with regular revenue flows; so, debt servicing is comfortable," he said.

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