Post Budget Analysis | Infrastructure: Road

<span style="font-weight: bold;">Proposals</span><br />
<br />
<ul>
<li>Total budgetary allocation for the sector (including PMGSY) raised by 6.7 per cent to Rs 89,544 crore from Rs 83,900 crore in the previous year.</li>
<li>The government continues its thrust on the PMGSY with an allocation of Rs 19,000 crore, which is the same as that of FY2018.</li>
<li>The Phase III of PMGSY has been launched to connect hospitals and schools v major link routes in the interiors of villages. The government¦s target is to construct 57,000 km of road network, involving 28.35 crore man days. </li>
<li>Equity raising plans proposed for the NHAI to part fund the ambitious Bharatmala programme.</li>
<li>The government, along with the regulators, will promote investments in A-rated bonds against the current rating threshold of AA.</li></ul><br />
<span style="font-weight: bold;">Impact: Neutral</span><br />
The total budgetary allocations including the performance-based funding (PBFF), the Central Road Fund (CRF) and GBS to fund the ambitious new highway development programme (including Bharatmala) is estimated at Rs 343,045 crore over FY2019v20. Therefore, starting this Budget, the allocations to the Road Ministry was expected to increase substantially. However, the budgetary allocation (excluding PMGSY) was raised 8.7 per cent to Rs 70,544 crore from Rs 64,900 crore in the previous year. A major part of the Bharatmala is expected to be undertaken by the NHAI. To bridge the shortfall in budgetary allocation, the NHAI is expected to raise funds by monetising more assets through tollvoperatevtransfer and InvIT routes (by transferring mature assets to special purpose vehicles or SPVs). <br />
<br />
Thrust on the PMGSY continued through advancement of completion target to 2019. Allocation to PMGSY remained at Rs 19,000 crore, which is the same as that of FY2018. This is expected to boost the order book of medium-sized road construction companies over the next two years. Further, Phase III of PMGSY is planned to be launched to connect hospitals and schools with major link routes in the interiors of villages. <br />