New Delhi: Prime Minister Narendra Modi's rockstar minister Nitin Gadkari has red-flagged Finance Ministry's plan to curtail capex on roads for FY17 as well as FY18, saying it will be a "major setback" to Rs 3 lakh crore worth of projects.
The concern by the Transport Minister assumes importance as the Modi government is focusing on faster infrastructure development to push up economic growth and jobs amid contraction in consumption demand after the demonetisation drive and a continuing sluggish private capex revival that threatens to drag down India's growth much below 7.6 per cent recorded during FY16.
In a letter to Finance Minister Arun Jaitley, Transport Minister Gadkari said the revised outlay of Rs 57,447 for FY17 was not only less than the budgeted Rs 57,976 crore, but far lower than the ministries proposal of Rs 62,489 crore.
What’s worse, Gadkari pointed out that the Finance Ministry is proposing FY18 capex outlay at only Rs 58,362 crore or less than 50 per cent of Transport Ministry's proposal of Rs 90,904 crore.
"The proposed reduction in allocation for the National Highways sector would cause a major setback in the progress of ongoing projects and in the achievement of the targets," Gadkari wrote in the letter, which was reviewed by BTVi.
"As we have substantial liabilities and Rs 35,500 km of national highway projects costing more than Rs 3 lakh crore are in progress, I would request you to restore our BE 2016-17 outlay of Rs 57,976 crore at RE 2016-17 stage so that payments for ongoing works and committed liabilities are not delayed," Gadkari said.
Gadkari also reminded Jaitley of Rs 7,500 crore of arbitral awards as approved by Cabinet Committee on Economic Affairs and Rs 1,000 crore to concessionaires for compensating for loss of toll revenues. After the announcement of demonetisation on November 8, the Transport Ministry waived tolls to prevent choking of traffic at highways.
In the absence of assured funding, Gadkari said it will not be possible to properly plan, prepare and award NH projects.
CAPEX DOWN ON FISCAL WOES
In July, Gadkari told lawmakers in Parliament that government plans to invest about Rs 7 lakh crore to develop around 50,000 kilometres of national highways over the next five years and another Rs 83,000 crore for Sagarmala port projects.
Recently, Modi unveiled Rs 12,000 crore plan for Char Dham road projects.
While the Modi government has drawn up ambitious infrastructure plans, the Finance Ministry has been cutting down on capex to keep a lid on the fiscal deficit targeted at Rs 4.58 lakh crore or 3.5 per cent of GDP for FY17.
Latest CGA data shows government capex at Rs 1.42 lakh crore until November, which is a tenth of the total expenditure of Rs 12.87 crore.
The capital expenditure on Plan head was at Rs 84,958 crore during April-November, which was 58 per cent of budget estimate for full FY17 and lower than 72.3 per cent of BE a year ago.
The capex under Non-Plan head was Rs 57,389 crore until November, which was 57 per cent of BE of full FY17 and lower than 57.6 per cent of BE a year ago.