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Thumbs up for roads sector as budgetary support rises 13.5%

Total Plan outlay stands at Rs 37,881 cr, which includes Rs 3,000 cr for the Northeast

BS Reporter 

has put the roads sector on a fast track mode. Finance Minister on Thursday announced an increase in the budgetary support to the by 13.48 per cent to Rs 28,881 crore for the current financial year. The total Plan outlay stands at Rs 37,881 crore, including an internal and extra budgetary resource (IEBR) of Rs 9,000 crore, according to the Budget documents.

In his speech, the finance minister said: "The sector had taken shape from 1998-2004 under NDA-1 (the National Democratic Alliance government led by A B Vajpayee). The sector again needs a huge amount of investment along with de-bottlenecking from maze of clearances. I propose investment in the National Highways Authority of India (NHAI) and state roads of an amount of Rs 37,880 crore, which includes Rs 3,000 crore for the north-east." During the current financial year , a target of national highway construction of 8,500 km would be achieved Jaitley added. Centre will also initiate work on select expressways in parallel to the development of the A sum of Rs 500 crore has been set aside for for project preparation.

"A country of the size of India must have a transport network which can ensure faster travel across cities which are geographically distant. This will also improve the supply chain in transporting goods across cities," Jaitley noted.

Samir Kanabar, tax partner (infrastructure practice) at EY, said: "It looks like the finance ministry and the transport and highways ministry are collaborating with each other with the finance minister echoing the transport minister's roadmap to lay down 23 km of road/highway everyday. This vision has been well augmented by the proposed infusion of funds into and the proposal to work on select expressways in conjunction with the development of Industrial corridor." Currently, road projects worth Rs 83,000 crore are pending completion. Since 2009, the United Progressive Alliance (UPA) government recorded the completion of only three projects, adding just 315 km to the existing highways' network. For the past few years, the projects have not been able to attract private investors, which is why the focus on having projects through government funds.

Jaideep Ghosh, national head of transport and logistics at KPMG, said, "allocation of funds for road development via is a step towards decongesting hinterland connectivity, especially as road is the most significant mode of cargo transport in India. However, the funds currently proposed would need to be significantly enhanced to make a significant impact. While taking a medium-term view, adequate thrust has been provided to improve the transportation and logistics sector in a comprehensive manner."

Gadkari seeks more power for transport ministry
In a briefing after the Budget, transport minister said his ministry has asked Prime Minister Narendra Modi to empower the ministry to award projects of Rs 1,000 crore on its own.

"We have asked the Prime Minister to allow us to clear projects worth up to Rs 1,000 crore. Many projects in the past have got delayed due to a number of committee approvals required for their implementation," Gadkari pointed out. Highway projects above Rs 1,000 crore can be taken up by the Cabinet. Till now, projects worth Rs 40,000 crore, which were stuck due to various issues, have been cleared by the ministry. The Cabinet in its meeting on Wednesday had further approved 11 projects worth Rs 16,000 crore, he said. NHAI will soon award new public-private-partnership projects in the sector, the minister said. "We don't require FDI (foreign direct investment) in the roads sector. Our policies encourage Indian contractors and more employment potential in Indian roads," he added.

First Published: Fri, July 11 2014. 00:45 IST