The road transport and highways ministry (MoRTH) has received a push with the Union Budget raising the allocation by 36 percent to around Rs 2.7 lakh crore for 2023-24.
This is nearly 10 percent jump over the Budgetary allocation of Rs 1.99 lakh crore made in the Budget for 2022-23.
Higher budgetary allocations were necessary to help the ministry meet the 25,000-km road development target announced by the government in the 2022-23 Budget, amid rising interest expenses and increasing land acquisition costs.
The government had set a target of 13,000 km of highway construction in FY2022-23, but the speed of construction was affected by unfavorable weather conditions. The road ministry is likely to complete the construction of 11,000 km of national highways in the current financial year.
As a result, MoRTH and NHAI are likely to have an ambitious targets of constructing 14,000 km of national highways in the next fiscal year.
The ministry has missed its target for two years in a row. It had failed to meet its target of building 12,000 km in 2021-22 and 13,000 km in 2022-23 by 1,000 and 2,000 km, respectively.
Out of the total Rs 2.7 lakh crore, the National Highways Authority of India (NHAI) has been allocated around Rs 1.62 lakh crore as part of MoRTH’s capital expenditure plan for 2023-24, a 21 percent increase compared to 2022-2023, when it was allocated Rs 1.34 lakh crore.
As per the revised estimates of the government, the NHAI will spend around Rs 1.42 lakh crore in 2022-23.
The rise in budgetary allocation to the NHAI is in line with the government’s strategy to recapitalise its balance sheet with higher budgetary support and zero market borrowings.
The government has set the NHAI's internal and extra-budgetary resources (IEBR) as negligible in 2023-24, indicating the NHAI will not look to borrow money to fund its capital expenditure.
This is the second straight year when the NHAI's market borrowing has been set as negligible.
In 2022-2023, the government had asked the highway developer to limit its borrowings. In the 2022-23 Budget, the government projected that NHAI’s IEBR would fall to around Rs 1 lakh, from Rs 65,000 crore in 2021-22.
As per the government's revised estimates the NHAI will spend Rs 798 crore as IEBR in 2022-23. IEBR comprises funds by way of profits, loans, and equity.
NHAI’s debt stood at Rs 3.44 lakh crore at the end of January 2022, as against Rs 24,188 crore in 2014-15, a 14-fold rise in less than seven years. The government is now looking to reduce NHAI’s debt to Rs 1 lakh crore by 2024-25.
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