R&B dept mulls floating 2 corporations to raise loans to build roads in every village in T

Hyderabad: In a move aimed at implementing chief minister A Revanth Reddy's plan to have pucca roads in every village, the roads and buildings department is now mulling floating two new corporations to raise off-budget borrowings to build these roads.
The complexity of securing funds for road development due to the debt burden from the previous govt has prompted the department to go for corporations to facilitate loans. But the proposal has hit a hurdle as many elected representatives are against the department's plan to set up toll on rural roads to enable the corporations to pay the lenders.
The plan, which is still at a preliminary stage, involves the two corporations paying half of the loan taken from financial institutions and the govt guaranteeing repayment of the rest.
Once the corporations are set up, they will need to outline financial resource mobilisation strategies to repay the loans to the financial institution. Part of this plan includes setting up toll gates on these village roads. Under the hybrid annuity model (HAM), the govt will bear a specific portion (about 40%) of the total road construction cost and the remaining 60% will be covered by the construction company through public private partnership (PPP). The construction company will manage the roads for a specified period (approximately 30 years) and tolls became essential to generate revenue.
The toll system is currently only implemented on national highways. Having them on rural roads could lead to significant public backlash, posing a challenge to public representatives.
A source said the government has tentatively set aside the toll system and is exploring alternative ways to generate funds to convince lending financial institutions. It includes utilising funds from central govt schemes such as the rural roads programme and also through the National Highways Authority of India.
A draft proposal on establishment of these corporations and the extent of loan they can secure and repayment model is expected to reach the govt soon.