Budget fine print: Debt ridden NHAI not to raise any funds in FY23

As they say, devil lies in the details. Lurking in the shadows of the mega headline figure of ₹1,99,107 crore budgetary allocation to the ministry of highways for FY23 -- up a whopping ₹81,006 crore, or 68.9%, from ₹1,18,101 crore in FY22 – lies the fact that the fundraising by the National Highways Authority of India (NHAI) is projected to drop to almost nil in the next fiscal.

Budget has projected that the Internal and Extra Budgetary Resources (IEBR) of highway regulator NHAI will dip to a mere ₹1 lakh in FY23. Seen in the context of the previous years’ IEBR, the projected amount looks akin to empty coffers of an authority which is in charge of the entire network of national highways in the country.

The ₹1 lakh IEBR for the next financial year compares starkly with ₹65,000 crore IEBR of NHAI pegged in 2021-22. Also, the revised estimate for the internal resource for the current financial year has been kept unchanged from the budget estimate.

An infrastructure expert told Fortune India that the change has been done to manage the high debt of the NHAI. “NHAI used to borrow money on its own balance sheet and invest. Since the debt burden of the authority has become too high, the government will directly fund highway development without leveraging NHAI’s balance sheet. Fund raising will be done by government without the NHAI having to borrow more. As and when the debt comes to manageable level, the IEBR component will start again,” the infra expert said.

NHAI’s total outstanding debt stood at ₹24,188 crore in 2014-15, when the BJP-led NDA government took over. NHAI’s total debt has zoomed about 14 times from FY15 level to ₹3,38,570 crore as on November 2021, according to a reply by the ministry of transport in the Parliament.

NHAI’s debt increased to ₹44,567 crore in FY16, ₹77,742 crore in FY17, ₹1,21,931 crore in FY18, ₹178,867 in FY19, and 3.17 lakh crore in FY21. The NHAI raises funds through issuance of bonds.

In FY19, the authority raised ₹61,217 crore from IEBR while the amount raised stood at ₹50,533 crore in FY18.

With insignificant IEBR, it is the Centre which will now meet the required amount. That is why a close perusal of the provision reveals that out of the total FY23 allocation of ₹1,34,015.01 to the authority, the IEBR stands at ₹1 lakh. The allocation for NHAI is higher than ₹1,22,350 crore in FY22, but the IEBR then was pegged at ₹65,000 crore, while the budget allocation was to the tune of ₹57,350 crore. In short, with the bellowing debt of the NHAI, the burden of funding the highways now lies totally on the Centre.