Budget 2016: Road sector alloted 97k cr; Permit raj abolition govt's medium term goal

New Delhi: Finance Minister Arun Jaitley on Monday announced an outlay of Rs 97,000 crore for the road
sector even as he reiterated the government's commitment to doing away with the permit raj to end roadblocks facing the sector.

With highways sector becoming a focus area for the Narendra Modi government, the game changing initiatives include upgradation of 50,000 kms of state highways into national highways, rolling out of 85 per cent of the stuck Rs 1 lakh crore projects and construction and award of 10,000 km roads each.

Budget 2016: Road sector alloted 97k cr; Permit raj abolition govts medium term goal

Representational image. Getty Images

"This is a totally unreformed sector which suffers from several impediments. Abolition of permit-raj will be our medium term goal... Entrepreneurs will be able to operate buses on various routes, subject to certain efficiency and safety norms", Jaitley said tabling the budget.

"I have proposed an allocation of Rs 55,000 crore in the Budget for Roads and Highways. This will be further topped up by additional Rs 15,000 crore to be raised by NHAI through bonds. Thus the total investment in the road sector, including PMGSY (Prime Minister Gram Sadak Yojna) allocation, would be Rs 97,000 crore during 2016-17," he said.

Road Transport and Highways Minister Nitin Gadkari termed it a "revolutionary" and "historic" budget with much emphasis on infrastructure and said the government has been able to revive the road sector which has been languishing in the "ICU" and now in months to come it will gain much momentum.

He said not only entrepreneurs will be able to ply buses but permit raj prevalent in the sector would be demolished.

The Finance Minister while presenting the budget said, "The major benefits of this game changing initiative will be provision of more efficient public transport facilities,greater public convenience, new investment in this moribund sector, creation of new jobs for our youth, growth of start-up entrepreneurs and other multiplier effects."

According to Jaitley, these measures will take us faster down the road to development.

The government will enact necessary amendments in the Motor Vehicles Act and open up the road transport sector in the passenger segment, he said adding, an enabling eco-system will be provided for the States which will have the choice of adopting the new legal framework.

India’s highest ever kilometres of new highways were awarded in 2015. At the same time, India’s highest ever production of motor vehicles was achieved in 2015.

"This is a sign of growth in the economy; but it presents a challenge also. Therefore, we have speeded up the process of road construction...Together with the capital expenditure of the railways, the total outlay on roads and railways will be Rs 2,18,000 crore in 2016-17," Jaitley said.

He said the government expect to approve nearly 10,000 kms of National Highways in 2016-17 which will be much higher than in the two previous years.

The pace of completion of road projects will rise to 10,000 kms in 2016-17. In addition, nearly 50,000 kms of State highways will be up-graded to National Highways.

The Finance Minister said in the road sector, there were more than 70 projects that were languishing at the beginning of the year, due to legacy factors.

"Aggregate length of these projects was about 8,300 kms involving more than Rs 1 lakh crore investment. With exemplary and proactive interventions by highways Minister (Nitin) Gadkari, nearly 85 per cent of these projects have been put back on track," he said.

The Road Transport and Highways Ministry's budget allocation for 2014-15 stood at Rs 33,048 crore while the Revised Estimate for 2015-16 was Rs 47,107 crore.

The budgetary estimate for 2016-17 stood at Rs 57,976 crore. To augment infrastructure spending further, Government will permit mobilisation of additional finances to the extent of Rs 31,300 crore by NHAI, PFC, REC, etc through raising of Bonds during 2016-17.

Passenger traffic on the roads has to be made more efficient for the benefit of the common man and the middle class, Jaitley said.

"We are implementing the Pradhan Mantri Gram Sadak Yojana (PMGSY) as never before. This Scheme had suffered in the past because of underfunding. The allocations in 2012-13 and 2013-14 were only Rs 8,885 and Rs 9,805 crore respectively. We have substantially increased the allocation in the last two
years and have now allocated Rs 19,000 crore in 2016-17," Jaitley said.

Together with States’ share, a total of about Rs 27,000 crore will be spent on the Yojana in 2016-17. "Our goal is to advance the completion target of the programme from 2021 to 2019 and connect the remaining 65,000 eligible habitations by constructing 2.23 lakh kms of roads. Accordingly, the pace of construction which is currently 100 kms per day, as compared to the average of 73.5 kms during 2011-14, will be substantially stepped up," he said.

Jaitley agreed that pollution and traffic situation in Indian cities is a matter of concern and to generate additional resources. "I propose to levy an infrastructure cess, of 1 per cent on small petrol, LPG, CNG cars, 2.5 per cent on diesel cars of certain capacity and 4 per cent on other higher engine capacity vehicles and SUVs," he said.

Commenting on the budget, Gadkari said, "For the first time in the country's history, much emphasis has been laid on roads and highways sector with a high provision of about Rs 1 lakh crore.

The announcements in the budget will pave way for employment of youth and the number of passengers in the buses will more than double to about 15 crore from the present 7 crore.

Four crore man days will be created just from award of 10,000 km of highways, he said adding that the employment potential could be judged.

He said after enabling provisions, private entrepreneurs could ply their buses on various routes.

He said providing legal framework for dispute resolution in PPP projects and public utility contracts will also go a long way.



Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to Firstpost.com/Whatsapp and hit the Subscribe button.

Updated Date: Feb 29, 2016 18:02:30 IST

Also See