The Union government has asked the National Highways Authority of India (NHAI) to continue on the path of fiscal consolidation and keep borrowings to a minimum in 2024-25 in an attempt to stop its debt ballooning to unsustainable levels.
According to the interim budget for 2024-25, no provision for borrowings by the highway developer has been made for the next financial year. However, the NHAI's budgetary allocation has been increased to Rs 1.68 lakh crore, 3.9 percent higher than the budget estimate of Rs 1.62 lakh crore made in the previous budget and Rs 1.41 lakh crore in 2022-23.
As per the government's revised estimates, NHAI will be allocated Rs 1.674 lakh crore in 2023-24.
This was part of the government’s move to reduce the highway developer’s debt. NHAI’s debt stood at Rs 3.44 lakh crore at the end of January 2022, 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.
As part of the budget for 2022-23 as well, the government projected NHAI’s internal and extra-budgetary resources (IEBR) to fall to around Rs 1 lakh, from Rs 65,000 crore in 2021-22. IEBR constitutes funds raised by NHAI by way of profits, loans, and equity.
The move to not borrow from the market comes in the backdrop of the central government increasing its Budgetary allocation to the Ministry of Road Transport and Highways of India to Rs 2.78 lakh crore, which is three percent higher when compared to 2023-24 and the government's push for divestment and asset monetization.
The government has set an ambitious divestment target of Rs 50,000 crore for 2024-25, about 67 percent higher than its revised aim to collect Rs 30,000 crore via asset sales in the current fiscal year ending March 31.
The push for divestment and asset monetization can also be seen by the government's move to abstain Indian Railway Finance Corporation (IRFC), which serves as the market borrowing arm for Indian Railways, from borrowing any funds in the form of debt during the financial year 2024-25, according to Budget documents.
This marks the second consecutive year in which IRFC's IEBR has been designated as negligible in the budget.
In 2022-23, IRFC's IEBR was set at Rs 66,500 crore as part of the Budgetary allocations. As part of the government's actual estimates, IRFC's IEBR for 2022-23 came in at Rs 30,239.43 crore in 2022-23. In 2021-22 IRFC had borrowed Rs 60,683.41 crore from the market.
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