Elevated funding to accelerate road projects

05 Feb 2024 CW Team

The experts have stated that the 2.7% increase in the budgetary allocation for road transport and highways, though relatively small, is based on a high existing allocation. They have mentioned that this increase will be dedicated to ongoing projects, while fresh developments are anticipated to come from the private sector, as envisioned by the government.

In the interim budget presented, Finance Minister Nirmala Sitharaman allocated Rs 2.78 trillion for roads, transport, and highways. This is in comparison to the Rs 2.70 trillion allocated in FY24, which was later revised to Rs 2.76 trillion.

Vinayak Chatterjee, the founder of The Infravision Foundation, commented that the increment in the allocation for the road sector, though modest, aligns with the overall trend of increased allocation for infrastructure. He mentioned that with the National Highways Authority of India (NHAI) facing constraints in raising further debt, the final budget is expected to substantially increase outlays, leveraging economic growth through robust infrastructure development.

Jagannarayan Padmanabhan, Senior Director at CRISIL Market Intelligence and Analytics, added that the marginal increase in the budgetary allocation for the road sector is on a high existing base, and a significant portion of it is committed to existing projects.

He further stated, "Looking ahead, the government's emphasis will be on initiating new projects in the build-operate-transfer (BOT) and public-private-partnership (PPP) mode to attract private sector investments." Additionally, he highlighted that asset monetization will continue to play a crucial role for the government in raising capital.

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