Budget 2021: In a big boost, road transport and highways ministry receives its highest allocation ever in Union Budget

A 32% increase in the capital outlay for the ministry of road transport and highways (MoRTH) in FY22 (budget estimate or BE) over FY21BE is expected to provide a significant boost to construction of highways, already on an upward trajectory over the past few years.

Highway construction peaked in FY19, at 30 km per day, before falling to 28 km a day in FY20. During the April-December period of the current fiscal, the average daily construction stood at 29 km.

The FY22 capital allocation for MoRTH at `1,08,230 crore is the highest-ever for the ministry — in FY21, this stood at `81,975 crore, and in FY20, at `68,373 crore (actual).

The total allocation, including revenue expenditure, for FY22 stands at `1,18,101 crore, up from `1,01,823 crore in FY21.

Of the total allocation, the National Highways Authority of India (NHAI) will get `57,350 crore, up from `49,050 crore (revised estimate) in FY21. NHAI has also been permitted to borrow `65,000 crore in FY22 — the same as FY21.

Union minister for road transport and highways Nitin Gadkari said the increased allocation will help in expanding road network in the country.

A proven tool for spurring economic activity, spending on highways has a multiplier effect on several sectors, including construction equipment, steel and cement, among others; besides creating employment opportunities.

India Ratings said the increased allocation will lead to improved connectivity, which in turn, will spur economic growth. The increased allocation will benefit road-focused construction companies. Icra’s Rajeshwar Burla said the “massive increase in the total capital outlay bodes well for the road sector.”

“Road development has always been a proven strong shot in the arm for boosting the economy. To overcome the pandemic’s impact on the economy, this (the increased allocation) was inevitable,” said Anil D Yadav, group chief finance officer, IRB Infra Group.

Presenting the Budget on Monday, finance minister Nirmala Sitharaman said 8,500 km of road and highway projects will be awarded by March 2022 to further augment road infrastructure. Also, 11,000 km of highways will be constructed in the next fiscal.

“More than 13,000 km length of roads, at a cost of `3.3 lakh crore, has already been awarded under the `5.35-lakh-crore Bharatmala Pariyojana, of which 3,800 km have been constructed,” she said.

She also said economic corridors, with an investment of over `2 lakh crore, are being planned for Tamil Nadu, Kerala, West Bengal and Assam — where the Assembly elections are due this year.