Rlys capex at all-time high
MIXED BAG
The interim Budget for 2019-20 (FY20) was a mixed bag for the transportation sector. While the railways lined up its highest-ever capital expenditure (capex) of ~1.58 trillion and an all-time high budgetary support of ~64,587 crore, the road and aviation sectors did not have much to smile about.
The National Highways Authority of India (NHAI) must gear up for higher fundraising through borrowings and monetisation of road assets as the government has reduced its budgetary support by ~631.63 crore. It has increased the authority’s borrowing limit by 21 per cent to ~75,000 crore for FY20. For the aviation sector, the government has increased the allocation for a regional connectivity scheme by 8.84 per cent to ~480 crore, against ~441 crore (Revised Estimates, or RE) released last fiscal year.
Though there was an increase in railways capex in FY20, the actual capex for railways in 2017-18 (FY18) has seen a 15 per cent drop from the RE of ~1.20 trillion last year. There was a 5 per cent drop in the RE for 2018-19 (FY19) to ~1.38 trillion, compared to ~1.46 trillion in last year’s Budget Estimates (BE).
Interestingly, the gross budgetary support of ~64,587 crore for the railways for FY20 is 21 per cent higher than the RE of ~53,060 crore in Budget 2018. The BE for FY20 comprises ~10,500 crore from internal resources and ~83,571 crore from extra budgetary resources, apart from the budgetary support.
In his speech, Finance Minister Piyush Goyal has projected an ambitious operating ratio of 95 per cent for the current financial year. Operating ratio is calculated based on how much money the railways is spending to earn each rupee. The actual operating ratio for FY18 and revised operating ratio for FY19 have deteriorated from 96 per cent and 92.8 per cent estimated during the last Budget.
The ambitious operating ratio of 95 per cent has been kept despite the government announcing the hiring of more than 280,000 people next financial year. For FY18, the capex was ~1.01 trillion, comprising ~43,417.55 crore of the budgetary support, ~3,069.78 crore of internal resources, and ~55,498.14 crore of extra budgetary resources. In RE FY19, the capex was ~1.38 trillion, comprising ~53,060 crore from budgetary support, ~6,500 crore from internal resources, and ~79,297.52 crore from extra budgetary resources.
Meanwhile, the provision for the NHAI includes investment for Bharatmala Pariyojana to be executed by the authority and the expenditure is met from the Central Road and Infrastructure Fund (CRIF), Permanent Bridge Fee Fund, and monetisation of the National Highways fund. The internal and extra budgetary resources utilised by the NHAI in FY19 include the authority’s loan of ~25,000 crore tied up with the State Bank of India.
The NHAI expects the road monetisation drive or tendering highway contracts on toll-operatetransfer basis will fetch the authority over ~15,000 crore in the near future.
The share of the road sector from the CRIF has gone down as the allocation from the fund has been earmarked for other infrastructure departments as well.