National highways at loss as telecom, hospitals gain from road fund

The share of National Highways in the road fund will be reduced because of telecom and hospitals getting moneyfrom it.

The Modi government has changed the nature of the Central Road Fund and renamed it the Central Road and Infrastructure Fund (CRIF) through an amendment to the Central Road Fund Act, 2000. The kitty of Rs 1.28 trillion for 2019-20 is now spread thinly across 12 sectors. 

Launched in 2000, the Central Road Fund was a major revenue for the government to finance road projects. The money from the fund comes from the road cess on excise duty on petrol and diesel.

The amendment prescribes the road cess be first credited to the Consolidated Fund of India and later, after adjusting for the cost of tax collection, should go to the CRIF.

The amount earmarked from the Central Road and Infrastructure Fund for 2019-20 is Rs 54,538.65 crore.

The money is expected to be spent on constructing highways and maintaining existing roads.

Drinking water and sanitation, health and family welfare, housing, power, railways, and shipping are among the 12 who are being funded to the levy on auto fuels.

In the case of telecom, funds are utilised for creation of optical fibre cable-based network for defence services, construction of border roads, national rural drinking water programme, urban and rural housing, railway safety, building rural roads, etc.

“Earlier the share of Ministry of Road Transport and Highways in the Central Road Fund was nearly 50 per cent, now that each and every ministry that has anything to do with infrastructure is included in the allocation from the Central Road and Infrastructure Fund, the share of the road ministry has gone down,” Kushal Kumar Singh, Partner, Deloitte India said. It is estimated to be 42.5 per cent next year, lower than 45 per cent in the current year ending March 2019.

The NHAI would have to depend on internal generation and borrowings more in 2019-20. The increase on this account is 21 per cent at Rs 75,000 crore over the current year. The NHAI generates revenue from tolling and now road monetisation contracts. 

The road monetisation drive or tendering highway contracts on toll-operate-transfer (TOT) basis is expected to fetch the authority over Rs 15,000 crore in the next financial year.