Annuity-based projects to come under FRBM act

Fiscal responsibility act (FRBM Act) will soon include all infrastructure projects executed through annuity payments by the government to private sector developers to ensure they do not become a big burden in the future. All central government PPP projects will be disclosed in the budget document. The Planning Commission is in favour of capping annuity payments and has already circulated a draft note in this respect. The National Highway Authority of India has to award projects worth Rs 40,000 crore on annuity basis in the current and next financial years as part of the government’s target to build 20 km of roads a day. Interest payments already account for 35 per cent of the tax revenues and the annuity variant of build-own-transfer (BOT), may lead to making future commitments that are beyond government’s means.