Road funds get jammed in spat

The Planning Commission and the road transport and highways department seem to be at loggerheads over use of proceeds of the Central Road Fund (CRF).

The commission has proposed that half of the Central Road Fund's collection may be allocated for viability gap funding of build-operate-transfer road projects and the rest spent on land acquisition and other utilities.

The proposal is likely to be put forward by it at the next Committee on Infrastructure meeting. The road transport and highways department is of the opinion that the fund should continue to be accounted as per the present system.

Central Road Fund (CRF) is the central pool to which petrol and diesel cess accrues. A committee headed by Rajiv Ratna Shah, member secretary, Planning Commission, has given the latest recommendation, aimed at funding the national highway programme. In 2006-07, the fund is estimated to collect Rs 8113 crore.

Sources said the road transport and highways department may have reservations over the move. "The transport ministry has communicated its stand to the commission and said that the proposal does not make sense. The ministry's reasoning is that since almost 100 per cent of all future projects would be undertaken by the ministry on BOT basis, starting separate accounting systems would only complicate things," ministry officials said.

At present, nearly 30 per cent of the CRF collected through levying Rs 1.50 cess on petrol and diesel goes to states. About 60 per cent goes for building national highways and the rest is for rail overbridges.

Officials added that the proposal, if it comes into effect, would make the private sector dependent on government funds. "It may negate the idea of increasing private sector involvement in infrastructure activities," the officials said.