The government’s decision not to burden the National Highways Authority India (NHAI) with additional borrowings in FY23, by providing a much higher budget support of Rs 1.34 lakh crore is aimed at reining in the entity’s burgeoning debt that stood at Rs 3.38 lakh crore at the end of November 2021, according to official sources. However, this doesn’t mean NHAI would not scale up its borrowings next year.
The idea is to give the entity that borrows on the strength of its balance sheet even as an implied sovereign support serves as an indirect aid, the leeway to mitigate its debt. At the same time, harnessing of non-debt capital through other sources like monetisation of operational highway stretches through the toll-operate-transfer mechanism and the InvIT routes would continue.
The NHAI was given a budgetary support of Rs 65,060 crore in FY22. The authority was allowed to borrow Rs 65,000 crore each in the current fiscal and in the previous fiscal. At the same pace of borrowing, its debt would have breached the `4 lakh-crore mark by the end of FY23. Servicing cost of debt, estimated to be Rs 30,000 crore in FY23, is putting a strain on NHAI’s balance sheet.
NHAI is an autonomous body. Its debt is accounted for in its books and is not part of the government’s debt.
NHAI’s debt was just Rs 24,188 crore in 2014-15. It went up to Rs 1.79 lakh crore in 2018-19 and further to Rs 3.38 lakh crore, as on November 30, 2021. While official sources said the authority might end the current fiscal year with Rs 3.4 lakh crore debt, rating agency Icra estimated the debt to be Rs 3.55 lakh crore. The rise in debt is mainly to execute aggressive construction targets.
Since inception in 1995, NHAI constructed a record 4,192 km of highways in 2020-21, up from 3,979 km in 2019-20 and 3,380 km in 2018-19. It was just 1,501 km in 2014-15; 1,988 km in 2015-16; 2,628 km in 2016-17 and 3,071 km in 2017-18.
“Road projects are a priority for the government. Investment in the road sector lifts demand for various other sectors apart from creating opportunities for job and employment. That is the reason why the government enhanced direct funding to the sector,” said a source.
An analyst said since build-operate-transfer (BOT) projects are not taking off as expected, NHAI has been funding most of the projects through the Engineering Procurement and Construction (EPC) and akin to it, the Hybrid Annuity Model (HAM) route.
Also NHAI is mandated to develop a major part of the first phase of the `5.35 lakh crore, 34,800 km Bharatmala Pariyojana, approved by the government in October, 2017. A lot of stretches under the programme are nearing the completion stage, requiring augmented funding.
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