Budget 2019: Govt increases highways budget by 6%, allocates Rs 83k crore for 2019-20

Citizens with income lesser than Rs 5 lakh were to get full tax rebate which meant that they don’t have to pay taxes. Rebate under section 87A was hiked to Rs 12,500 from Rs 2,500. The amount under standard deduction was also hiked by Rs 10,000 to Rs 50,000 from Rs 40,000.

The finance ministry on February 1 allocated the highest ever budgetary support of Rs 83,016 crore to the highways sector under the interim budget for 2019-20.

“Infrastructure is the backbone of any nation’s development and quality of life. Whether it is highways or railways or airways or even digi-ways, we have gone beyond incremental growth to attain transformative achievements,” interim finance minister, Piyush Goyal said while presenting the budget.

The amount was up by 5.58 percent against the previous year’s budgetary allocation of Rs 78,625.5 crore (revised estimate). The allocation made by the government is the expected estimates for the year, a full year and exact budget for 2019-20 would be presented by the new government in June-July.

This budget is Modi government’s last budget before the country votes a new government to power during the Lok Sabha election due around April-May 2019.

The government has revised FY19 estimates upwards from Rs 71,000 crore (budget estimate) to Rs 78,625 crore.

The revision, however, is less than what the road transport and highways ministry was hoping to get during the current fiscal.

“The finance ministry has given us less than what was to be given during 2018-19. It has reduced our revised estimate by almost Rs 2,000 crore,” a senior government official told Moneycontrol.

According to the official, the highways ministry was hoping for a revised budgetary allocation of close to Rs 80,681 crore (including funds to be received from the government’s first toll-operate-transfer highways’ bundle) but close to Rs 2,000 crore has been “withheld for the social schemes”.

"The finance minister in his budget did not get into details of allocation across infrastructure sub sectors except railways, where, budgetary support is increased by 18 percent but overall capital investment has gone by 7 percent. Even On allocation to rural road has increased around 5 percent which again indicates allocations in single digits," Vishwas Udgirkar, partner, Deloitte India told Moneycontrol adding that the sector expects  "upward revised" numbers in the July budget

"Having said so, the 10 years vision statement instructive is on the top of the list to reaffirms it’s importance," he said.

Highways sector has been one of the best performing areas of the government with the government expenditure rising from Rs 34,345.2 crore in 2014-15 to Rs 78,625.5 crore in 2018-19. According to a report by rating agency ICRA, close to 39 percent projects were started under the highways sector out of over 600 infrastructure related projects started between 2014 and 2018.

Union minister for road transport and highways, Nitin Gadkari, envisions to take the national highway network to two lakh kilometer by the end of his tenure from little over 90,000 km when he took up the ministry in 2014. The target looks daunting as the ministry has touched about 1.31 lakh km by the end of December 2018.

To achieve his vision of massive highway network in the country, Gadkari had started Bharatmala, the government’s flagship highway construction programme in 2017 that envisions to build over 60,000 km of national highways in two phases.

The “ambitious” project, with a total capital outlay of Rs 6.92 lakh crore will see construction of Economic Corridors (9000 km), Inter Corridor and Feeder Route (6000 km), National Corridors Efficiency Improvement (5000 km), Border Roads and International Connectivity (2000 km), Coastal Roads and Port Connectivity (2000 km), Green field Expressways (800 km) and remaining work of NHDP works (10,000 km).

The first phase, being undertaken between 2017 and 2022, will see construction of 34,800 km of national highways, including 10,000 km of remaining highways under NHDP, at the cost of Rs 5.35 lakh crore.

Investment in highways has multi-fold impact as this opens the gateway for supply industries such as cement and steel coupled with creating many fold job opportunities. Bharatmala is expected to create two million direct jobs.

Till December, government has constructed 9,829 km of national highway for FY19 and has awarded projects for 6,500 km.

Gadkari had set a target of awarding projects for 20,000 km and constructing 16,418 km of national highways during 2018-19. During 2017-18, the ministry had awarded projects worth 17,055 km and had constructed 9,829 km of national highways.