Budget 2019: Rlys capex at all-time high; budgetary support cut for NHAI

Interestingly, the gross budgetary support of Rs 64,587 crore for the railways for FY20 is 21 per cent higher than the RE of Rs 53,060 crore in Budget 2018. The BE for FY20 comprises Rs 10,500 crore from internal resources and Rs 83,571 crore from extra budgetary resources, apart from the budgetary support.

In his speech, Finance Minister Piyush Goyal has projected an ambitious operating ratio of 95 per cent for the current financial year. Operating ratio is calculated based on how much money the railways is spending to earn each rupee.  The actual operating ratio for FY18 and revised operating ratio for FY19 has deteriorated from 96 per cent and 92.8 per cent estimated during the last Budget.  

The ambitious operating ratio of 95 per cent has been kept despite the government announcing the hiring of more than 280,000 people next financial year. For FY18, the capex was Rs 1.01 trillion, comprising Rs 43,417.55 crore of the budgetary support, Rs 3,069.78 crore of internal resources, and Rs 55,498.14 crore of extra budgetary resources. In RE FY19, the capex was Rs 1.38 trillion, comprising Rs 53,060 crore from budgetary support, Rs 6,500 crore from internal resources, and Rs 79,297.52 crore from extra budgetary resources.

Meanwhile, the provision for the NHAI includes investment for Bharatmala Pariyojana to be executed by the authority and the expenditure is met from the Central Road and Infrastructure Fund (CRIF), Permanent Bridge Fee Fund, and monetisation of the National Highways fund. The internal and extra budgetary resources utilised by the NHAI in FY19 include the authority’s loan of Rs 25,000 crore tied up with the State Bank of India.

The NHAI expects the road monetisation drive or tendering highway contracts on toll-operate-transfer basis will fetch the authority over Rs 15,000 crore in the near future. The share of the road sector from the CRIF has gone down as the allocation from the fund has been earmarked for other infrastructure departments as well.

India is constructing 27 km of roads every day since FY18. This is way lower than the target of 45 km per day for the current year (FY19). In FY18, the length of highways completed by the Ministry of Road Transport and Highways, the NHAI, and the National Highways & Infrastructure Development Corporation in FY18 was 9,829 km, or roughly 27 km per day.

Goyal said India’s aviation sector was one of the fastest-growing air traffic markets in the world. Routes under the third round of UDAN announced in the last week of January 2019 focused on waterdromes and awarding those routes that were cancelled under the previous two phases. As many as 235 routes were awarded to 11 airlines in this phase.