Indian government to spend Rs 7 lakh crore to build 50,000 km of National Highways over next 5 years

The Indian government has announced to spend about Rs 7 lakh crore to develop National Highways of around 50,000 km in the next five years.

Further, the government has allocated a total Gross Budgetary Support (GBS) of Rs 46,834 crore including cess and toll remittance for 2016-17 for the Ministry of Road Transport & Highways (MoRTH). In addition, Internal & Extra Budgetary Resources (IEBR) of Rs 59,279 crores has also been allowed to be raised for highways in 2016-17.

In April, Nitin Gadkari, minister of Road Transport & Highways, had fixed a 2.5 times increase in the target for award and construction of National Highways for 2016-17. This included a target of 25,000km of NHs to be awarded in 2016-17 as against the 10,000km awarded in 2015-16. The construction target this year is set at 15,000km (or 41km a day) as against the 6,000km (16.5km a day) constructed last year.

In the last two years, MoRTH has approximately awarded projects worth Rs 2 lakh crores. For the first year, the focus was on public funded projects (EPC) as the sector was under tremendous stress. Most of the projects work was stalled. Today slow recovery has started and in the last two years, the ministry has been able to award more than 15 projects under PPP. A new model of Hybrid Annuity has been designed, in which the risk has been shared by financing up to 40% during construction, and rest through annuities that are calculated based on bank rates plus 3%. Plans have been prepared for a combination of budgetary support, internal and external borrowings and innovative models like TOT (Toll Operate Toll).

Through the budgetary support of Fuel Cess and toll collected, the ministry has received approximately Rs 65 thousand crore this year. The National Highways Authority of India (NHAI) has also been given permission to borrow Rs 35 thousand crore this year alone. In total, NHAI can borrow up to Rs 75 thousand crore, which it aims to raise through toll collection on 100 public funded completed projects. 

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