Budget 2018: Allocation for highways set to treble in Modi’s term
NEW DELHI: The government is planning to increase the budgetary allocation for highways by over 15 per cent to Rs 71,000 crore, along with permission to NHAI to raise another Rs 61,000 crore, in 2018-19, resulting in the total spend on the sector going up by nearly three times since the Narendra Modi government assumed office in 2014.
At a time when private investment remains muted, highways has emerged as one of the key sectors for the government to step up public investment to ramp up economic activity and create jobs. The focus on highways, which boosts the demand for cement and steel, has sped up construction activity to 22.5 km a day, compared to 12 km a day in 2014-15, marking a rise of close to 90 per cent.
The planned increase in allocation is another step towards continuing the momentum although the finance ministry has indicated a reduction in the funds allocated for the current financial year from the budget estimate of around Rs 64,000 crore to around Rs 61,000 crore in the revised estimates that will be presented by finance minister Arun Jaitley on February 1.
“We are expecting some increase in private sector investment during the next three months as many projects under the public private partnership (PPP) model are set to be awarded. But the government has pumped in more funds for building highways. These public funded works will eventually become PPP projects when we award them for fixed years under toll, operate and transfer (TOT) model. The private players will make upfront payment to the government and they will be responsible for maintenance and operation as well,” said a highways ministry official.
According to official data, public spending in the highways sector has increased from approximately Rs 32,000 crore in 2014-15 to more than Rs 70,000 crore in 2016-17. It’s set to be higher during this year. On the other hand, private investment has fallen by almost half between 2015-16 and 2016-17 and during the current fiscal, private players have invested only Rs 9,800 crore against the budgetary estimate of Rs 32,400 crore.
Till December, the daily highway construction stood at 23.6 km and the ministry is confident of pushing it to 25 km a day by March. However, it is still far off the target of building 40 km per day, set by highways minister Nitin Gadkari.