The Budget for FY25 has raised capital allocation for the ministry to ₹2.72 trillion from the FY24 budgeted level of ₹2.58 trillion. Mint had reported that capital allocation for the sector would rise further to maintain focus on building more number of highways and access-controlled expressways in the country.
A substantial portion of higher allocation for FY25 would also towards meeting capital expenditure of National Highways Authority of India (NHAI), the prime highway construction agency, which has been put on a moratorium for market borrowings for past three years and being funded entirely from the budget.
The higher capex for MoRTH announced in interim budget may see some revision when full budget is presented by the new government at the Centre early in the second half of 2024 calendar year, a person privy to the development said. In response to a Mint query, MoRTH had indicated that its capex may rise to ₹3.3 trillion in FY25.
A higher budgetary allocation for MoRTH for FY25 in the interim budget would build upon rise in capex for the ministry in FY24 when allocations rose from a level of ₹206,000 crore (revised estimate) in FY23 to ₹258,000 crore in FY24. Prior to that, capex for road and highways increased by a historic 82% from a level of ₹113,000 crore (actuals) in FY22.
A look at the expenditure trend of MoRTH highways shows that the balance of government spending has clearly shifted towards capital spending over past few years. In 2021-22, capital expenditure stood at ₹113,000 crore while revenue expenditure was just over ₹10,000 crore.
The ratio between revenue and capital expenditure stood at 50:50 level in 2014-15. But the ratio changed from that year onwards. In 2015-16, this ratio changed, with the ministry spending more funds on capital expenditure. Since then, the ministry has increased its capital expenditure significantly, while revenue expenditure has gradually declined and is now flat at around ₹11,000 crore. In 2023-24, over 96% of ministry’s spending is budgeted to be capital expenditure, prior to this year, the capital expenditure was 95% and in FY22 it stood at still lower level of around 90%.
Apart from focus on capital spending, the quality of expenditure has also seen an improvement with maximum funds going to NHAI that had mandate to build highways and expressways in the country. Out of ₹123,500 crore total allocation (capital plus revenue expenditure) in 2021-22, a substantial, ₹57,000 crore has gone to NHAI, a jump of over 35% over previous year. This figure has further gone up to ₹142,000 crore and ₹162,000 crore in FY23 and FY24, respectively. The total allocation of MoRTH during these two years stood at ₹217,000 crore and ₹270,000 crore, respectively.
In the last nine years, length of national highways has gone up by about 60% from 91,287 km (as on April 2014) to over 145,000 km now. The target is to take it up to 200,000 km by FY25. All this happened despite the adverse situation due to covid restrictions and heavy and long monsoon season. With higher allocation, NHAI proposes to further step up highways construction taking it up from a level of 37 km per day in 2020-21 to close to over 40 km in next fiscal. The target for current year is close to record levels achieved in FY21.
Highway construction in the pre-pandemic period of FY20 spanned 10,237 km at a daily rate of 28.04 km. The pace increased during the first pandemic year (FY21), when lockdowns helped accelerate construction, resulting in a record 13,327 km of highways built at 36.51 km per day. In FY22, the rate slowed again to 10,457 km at 28.64 km per day. For FY22, the road ministry initially aimed to construct 14,600 km of highways—or 40 km per day. However, it later revised the goal to 12,000 km. The year FY23 ended with 28.3 km/day construction with overall 10,331 km of highways being built in the year.
The government of India has allocated ₹111 trillion ($1.4 trillion) under the National Infrastructure Pipeline for FY 2019-25. The roads sector is likely to account for 18% capital expenditure over FY 2019-25.
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Published: 01 Feb 2024, 01:21 PM IST