Budget might announce 70% rise in allocation for roads

The government plans to construct 15,000 km of roads in next financial year

The Union Budget for 2015-16, scheduled to be presented on February 28, is likely to see the biggest jump in budgetary allocation for the roads and highways sector in the past decade. Sources in the roads ministry estimate a rise of about 70 per cent in budgetary allocation — from Rs 26,000 crore estimated for 2014-15 to about Rs 45,000 crore for 2015-16.

The government plans to construct 15,000 km of roads in the next financial year.

 

The last such increase in the allocation for the roads sector was when the National Democratic Alliance government, under Atal Bihari Vajpayee, launched the National Highway Development Project: The 2000-01 Budget had seen a year-on-year increase of 83 per cent in the budgetary allocation towards the surface transport ministry — from Rs 2,823 crore in 1999-2000 to Rs 5,184 crore in 2000-01.


“This time, we are expecting the increase to be Rs 18,000-20,000 crore over the previous Budget allocation,” said a senior road transport and highways ministry official.

In early January, the government had increased the basic excise duty on petrol and diesel by Rs 2 a litre. This was attributed to a need to fund the “ambitious infrastructure development programme of the government”, according to a press release by the government.

Two other increases were announced in November and December 2014. The funds from the third increase in duty were to be subsumed under the government’s infrastructure development fund and were likely to fetch the government Rs 6,000-7,000 crore through this financial year. On annualised terms, the proceeds stand at Rs 24,000-28,000 crore.

“The Budget for 2015-16 will include the amount accrued from the basic excise duty rise. However, the total rise will be another Rs 10,000 crore, in addition to that mop-up,” said the official quoted earlier.

The proceeds from the basic duty increase go towards the Consolidated Fund of India, from where these can be redirected to the roads ministry. However, this isn’t dedicated for road development, unlike the Central Road Fund, a separate revenue stream dedicated to the development and maintenance of rural and state roads, national highways and rail bridges.

The road cess fund is collected from an additional excise duty on petrol and diesel. Currently, road cess is Rs 2 a litre. Earlier, it was proposed road cess be increased to fund infrastructure development in the country. Business Standard had reported Budget 2015-16 was likely to announce an increase of Rs 1-2 a litre in road cess.

“We have sought an increase in road cess. However, it’s possible the basic excise duty hike will stay and the proceeds directed to our corpus for infrastructure development,” said a senior ministry official, requesting anonymity.

The need for increased budgetary support has been felt for a while. While presenting the Budget for 2015-16, Union Finance Minister Arun Jaitley had pointed out the highways sector needed huge investment. Nitin Gadkari, Union minister for road transport & highways, has repeatedly said the government is targeting highway construction at 30 km/day through the next two years.

Around 60 per cent of National Highways Authority of India projects are stuck, most due to issues involving land acquisition.