Impact of Central Road Fund provision
ROADS & HIGHWAYS

Impact of Central Road Fund provision

There have been ongoing speculations that amendment in the Central Road Fund (CRF) provisions as proposed in the recent Budget may hit NHAI significantly. “Partly yes,” says Devayan Dey, Director-Capital Projects and Infrastructure, PWC, as non-discretionary allocations from CRF can now be at the discretion of the Ministry of Finance. “Also, partly no,” he adds, because when patterns are looked at retrospectively, it appears that this was being planned for quite some time. 
Within budgetary allocations, the cess component had reduced to a third from about Rs 60 billion in FY13 to about Rs 23 billion in FY17. However, the net allocation to NHAI had increased 22 times from ~ Rs 17 billion in FY13 to about ~ Rs 370 billion in FY19 (revised estimates). 

The Ministry of Finance seems to be taking due cognisance of the requirement. However, Dey highlights a concern: A majority of the funding source (60 per cent in FY17) still remains through bonds. Rising coupon or principal obligations along with growing annuity commitments can have an impact on financial sustainability in future years.

A back-of-the-envelope calculation indicates that about Rs 2 trillion will be needed to construct 40 km a day on EPC or item rate (assuming four lane on an average with land and other ancillary costs). “Fund availability with NHAI certainly makes it clear that if projects are constructed strictly on EPC or Item Rate mode, the target may not be achievable practically,” says Dey. “The HAM projects awarded in the past two years may provide a push in the short term (without requiring complete capital investment).”

That said, Dey throws up some questions to ponder upon: Is the figure of 40 km a day still relevant today? With the push to dedicated freight corridors, inland water transport, airline routes, and each being strategised to take a fair share of freight and passenger transport, are we not duplicating investments? Do we still need extensive capacity augmentation or is it now time to focus on maintenance and asset management instead? 

SHRIYAL SETHUMADHAVAN

There have been ongoing speculations that amendment in the Central Road Fund (CRF) provisions as proposed in the recent Budget may hit NHAI significantly. “Partly yes,” says Devayan Dey, Director-Capital Projects and Infrastructure, PWC, as non-discretionary allocations from CRF can now be at the discretion of the Ministry of Finance. “Also, partly no,” he adds, because when patterns are looked at retrospectively, it appears that this was being planned for quite some time. Within budgetary allocations, the cess component had reduced to a third from about Rs 60 billion in FY13 to about Rs 23 billion in FY17. However, the net allocation to NHAI had increased 22 times from ~ Rs 17 billion in FY13 to about ~ Rs 370 billion in FY19 (revised estimates). The Ministry of Finance seems to be taking due cognisance of the requirement. However, Dey highlights a concern: A majority of the funding source (60 per cent in FY17) still remains through bonds. Rising coupon or principal obligations along with growing annuity commitments can have an impact on financial sustainability in future years.A back-of-the-envelope calculation indicates that about Rs 2 trillion will be needed to construct 40 km a day on EPC or item rate (assuming four lane on an average with land and other ancillary costs). “Fund availability with NHAI certainly makes it clear that if projects are constructed strictly on EPC or Item Rate mode, the target may not be achievable practically,” says Dey. “The HAM projects awarded in the past two years may provide a push in the short term (without requiring complete capital investment).”That said, Dey throws up some questions to ponder upon: Is the figure of 40 km a day still relevant today? With the push to dedicated freight corridors, inland water transport, airline routes, and each being strategised to take a fair share of freight and passenger transport, are we not duplicating investments? Do we still need extensive capacity augmentation or is it now time to focus on maintenance and asset management instead? SHRIYAL SETHUMADHAVAN

Next Story
Real Estate

Birla Estates Tops Global GRESB 2025 Rankings

Birla Estates (BEPL), a wholly owned subsidiary of Aditya Birla Real Estate (formerly Century Textiles and Industries Limited), has been recognised as a Sector Leader in the 2025 GRESB Real Estate Assessment, securing top honours across multiple global and regional categories.Birla Estates’ Achievements in GRESB 2025:Global Sector Leader – ResidentialGlobal Sector Leader – Non-Listed ResidentialRegional Sector Leader – Asia – ResidentialRegional Sector Leader – Non-Listed – Asia – ResidentialThese distinctions reaffirm Birla Estates’ exceptional performance in Environmental, ..

Next Story
Infrastructure Transport

Progota India Secures RDSO Clearance for Kavach 4.0

Concord Control Systems, one of India’s leading manufacturers of embedded electronic and critical system solutions, announced that its associate company, Progota India, has received Technical Prototype Clearance from the Research Designs and Standards Organisation (RDSO) for Kavach 4.0, the latest version of Indian Railways’ indigenous Automatic Train Protection (ATP) system.With this clearance, Progota has been formally approved to execute its ongoing trial order from South Central Railway, marking a key milestone in India’s railway modernization journey. The approval also establishes P..

Next Story
Infrastructure Urban

MPS Interactive Systems Completes Full Acquisition of Liberate Group

MPS Interactive Systems (MPSi), a material subsidiary of MPS, has completed the acquisition of the remaining shareholding in the Liberate Group of Companies—comprising Liberate Learning, App-eLearn, and Liberate eLearning.With this transaction, MPSi now holds 100 per cent ownership of all entities within the Liberate Group, making them its wholly owned subsidiaries. The acquisition was executed in line with the valuation methodology defined in the original transaction documents.Commenting on the development, Rahul Arora, Chairman and CEO of MPS, said, “The corporate learning sector continu..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?