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Budget 2019: Rlys capex at all-time high; budgetary support cut for NHAI

NHAI must gear up for higher fundraising through borrowings and monetisation of road assets as the government has reduced its budgetary support by Rs 631.63 crore

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Shine Jacob Megha Manchanda Arindam Majumder

Last Updated : Feb 02 2019 | 12:40 AM IST

The interim Budget for 2019-20 (FY20) was a mixed bag for the transportation sector. While the railways lined up its highest-ever capital expenditure (capex) of Rs 1.58 trillion and an all-time high budgetary support of Rs 64,587 crore, the road and aviation sectors did not have much to smile about.

The National Highways Authority of India (NHAI) must gear up for higher fundraising through borrowings and monetisation of road assets as the government has reduced its budgetary support by Rs 631.63 crore. It has increased the authority’s borrowing limit by 21 per cent to Rs 75,000 crore for FY20. For the aviation sector, the government has increased the allocation for a regional connectivity scheme by 8.84 per cent to Rs 480 crore, against Rs 441 crore (Revised Estimates, or RE) released last fiscal year.

Though there was an increase in railways capex in FY20, the actual capex for railways in 2017-18 (FY18) has seen a 15 per cent drop from the RE of Rs 1.20 trillion last year. There was a 5 per cent drop in the RE for 2018-19 (FY19) to Rs 1.38 trillion, compared to Rs 1.46 trillion in last year’s Budget Estimates (BE).

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Interestingly, the gross budgetary support of Rs 64,587 crore for the railways for FY20 is 21 per cent higher than the RE of Rs 53,060 crore in Budget 2018. The BE for FY20 comprises Rs 10,500 crore from internal resources and Rs 83,571 crore from extra budgetary resources, apart from the budgetary support.

In his speech, Finance Minister Piyush Goyal has projected an ambitious operating ratio of 95 per cent for the current financial year. Operating ratio is calculated based on how much money the railways is spending to earn each rupee. The actual operating ratio for FY18 and revised operating ratio for FY19 has deteriorated from 96 per cent and 92.8 per cent estimated during the last Budget.

The ambitious operating ratio of 95 per cent has been kept despite the government announcing the hiring of more than 280,000 people next financial year. For FY18, the capex was Rs 1.01 trillion, comprising Rs 43,417.55 crore of the budgetary support, Rs 3,069.78 crore of internal resources, and Rs 55,498.14 crore of extra budgetary resources. In RE FY19, the capex was Rs 1.38 trillion, comprising Rs 53,060 crore from budgetary support, Rs 6,500 crore from internal resources, and Rs 79,297.52 crore from extra budgetary resources.

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Meanwhile, the provision for the NHAI includes investment for Bharatmala Pariyojana to be executed by the authority and the expenditure is met from the Central Road and Infrastructure Fund (CRIF), Permanent Bridge Fee Fund, and monetisation of the National Highways fund. The internal and extra budgetary resources utilised by the NHAI in FY19 include the authority’s loan of Rs 25,000 crore tied up with the State Bank of India.

The NHAI expects the road monetisation drive or tendering highway contracts on toll-operate-transfer basis will fetch the authority over Rs 15,000 crore in the near future. The share of the road sector from the CRIF has gone down as the allocation from the fund has been earmarked for other infrastructure departments as well.

India is constructing 27 km of roads every day since FY18. This is way lower than the target of 45 km per day for the current year (FY19). In FY18, the length of highways completed by the Ministry of Road Transport and Highways, the NHAI, and the National Highways & Infrastructure Development Corporation in FY18 was 9,829 km, or roughly 27 km per day.

Goyal said India’s aviation sector was one of the fastest-growing air traffic markets in the world. Routes under the third round of UDAN announced in the last week of January 2019 focused on waterdromes and awarding those routes that were cancelled under the previous two phases. As many as 235 routes were awarded to 11 airlines in this phase.