Concern over NHAI debt unwarranted: Chairman Aramane

NEW DELHI:  The chairman of National Highway Authority of India (NHAI) has refuted the doubts over sustainability of the mounting debt taken by the government agency entrusted with building roads and highways. Chairman Giridhar Aramane, who is also the secretary in the Ministry of Road Transport and Highway (MoRTH), says the doubts over NHAI’s debt is a bogey created by some vested interest. 

“We typically take up roads which are commercially viable, where the cost of funds is less than the internal rate of return (IRR) of new projects. 80% of the projects taken up by NHAI are like that where the rate of return is more than the cost of funds,” says Aramane while talking to The New Indian Express. He says there is no question of the unsustainability of the debt taken by NHAI. However, he emphasises that NHAI must maintain its policy of taking up only those projects which are commercially viable.

“Typically, NHAI looks for an IRR of 6.5-8%, if that (condition) is satisfied, we will go ahead with the project,” says the chairman. NHAI’s debt had reached Rs 3.07 lakh crore on March 31, 2021, up 23% from Rs 2.49 lakh crore a year ago, Minister of Road Transport and Highway Nitin Gadkari had informed the parliament. NHAI’s debt has increased four-fold in the last 4 years from Rs 75,000 crore on March 31, 2017. It paid Rs 18,840 crore as interest in 2020-21.

Aramane, however, says that the highway authority does take up road projects which may not be commercially viable on their own but have potential for high economic returns. “Suppose the economic return of the road is 25%, and the internal rate of return is 7-8%, then some of such roads should be taken up by NHAI,” Aramane says.