Highway projects rely heavily on borrowing

Buoyed by the debt market's favourable response to its highways development schemes, the Centre is targeting a seven-fold increase in market borrowings in the Tenth Plan period.

Consequently, the government's investment outlay for the highways sector during the current Plan period envisages more than a 200 per cent hike over the outlay in the previous one.

The Centre plans to leverage Rs 24,700 crore from the markets during the five-year period of the current Plan (2002-07), as against market borrowings of Rs 3,600 crore during the whole of the Ninth Plan period.

A substantial portion of the borrowings would be utilised for the ongoing Rs 58,000 crore National Highways Development Project, government officials said.

The National Highways Authority of India (NHAI), which is implementing the National Highways Development Project, raised Rs 1,460 crore from the market through tax-free bonds during 2000-01 and 2001-02 and mopped up Rs 2232.43 crore in 2002-03 for part-funding the first phase of the National Highways Development Project.

The authority would raise a total of Rs 10,000 crore through market borrowings to fund the first phase of the project and the remaining would be utilised for the second phase, officials said.

The accruals from the cess on petrol and diesel, being channelised into the Central Road Fund, is expected to be around Rs 10,500 crore in this Plan period, asa gainst Rs 5,270 crore realised during the Ninth Plan period.

A part of the cess on petrol and diesel, imposed in May 2000, accrues to the Central Road Fund and is kept aside for the upgradation of highways under the National Highways Development Project.

With the first phase of the NHDP expected to be completed by December 2005 and the second phase by December 2007, the budgetary resources for the project during the current plan Period have also been hiked to Rs 9,664 crore, from the Rs 5,507.39 crore allocated during the Ninth Plan period.

A substantial portion of the budgetary funding, however, will be utilised for the new highway upgradation projects announced in the Budget for 2003-04.