Plan panel mulls cess for rural roads

Faced with huge cost overruns due to a delay in building the rural roads under Bharat Nirman, the Planning Commission is now looking at alternative ways to fund the ambitious rural development project of the United Progressive Alliance (UPA) government.

Accordingly, it is proposing the levy of a "rural development cess on agriculture produce" as well as another levy on automobiles.

The rural road project, christened the Pradhan Mantri Gram Sadak Yojana (PMGSY), has seen tardy performance on the target of constructing 146,185 km of rural roads by 2009. Planning Commission sources say this could now take another year beyond the original deadline.

The government has decided to borrow Rs 16,500 crore from the National Bank for Agriculture and Rural Development (Nabard) by leveraging cess accruals from the road project apart from the Rs 43,251 crore fund allocation from the exchequer for the 11th Five Year Plan. 
 

PROGRESS OF BHARAT NIRMAN (2005-07)
Status	Target	Actual	Actual (%)
Length (km)	50,674.55	39,476.55	77.9
Number of habitations	23,164	13,831	59.71
Road upgrade (km)	66,063.66	50,055.50	75.77
(Source: Planning Commission)

However, the Plan panel feels the loan repayments to Nabard commencing in 2009-10 would limit the cess available to finance the road project.

The panel wants to explore garnering support from the farmers of the locality to levy marketing fee and rural development cess on agriculture produce.

It has also proposed to collect a special purchase tax on two-wheelers, cars and agricultural tractors.

Such funds collected will be allocated for rural roads and provision of road transport services in rural areas. However, it has ruled out any scope for seeking private sector financing citing low volumes of traffic.

Under Bharat Nirman, the proposed roads are expected to benefit 66,802 unconnected habitations in the country. To ensure full farm to market connectivity, there is also a proposal to upgrade 194,132 km roads.