1.

LATEST POLICY ENVIRONMENT

A. VEHICLE SCRAPPAGE POLICY: CONVERTING WASTE TO WEALTH
The voluntary Vehicle Scrappage Policy was introduced to establish a framework for safely and
sustainably phasing out unsafe and polluting automobiles. The new scrappage policy, as the prime
minister emphasised, is a crucial link in the circular economy of Waste to Wealth. Fees for
conducting fitness tests and renewing fitness certificates for motor vehicles older than 15 years will
increase. The "Vehicle Scrapping Policy," also known as the V-VMP, aims to develop an eco-system
for gradually phasing out unsafe and polluting automobiles. Regardless of age, the strategy aims to
encourage the voluntary destruction of defective commercial and passenger cars.
In order to attract private investment in the vehicle scrapping ecosystem, a single window system
has been developed. This portal is part of the National Single Window System (NSWS), hosted by
DPIIT and Invest India.

B. Shri Nitin Gadkari inaugurated the country’s first Private LNG Facility plant at Nagpur
A policy created by Shri Nitin Gadkari promotes the development of domestic ethanol, bio-CNG,
LNG, and hydrogen fuels as cheaper, cleaner alternatives to imported fuels. He claimed that the
ministry is always developing new alternative fuels.
C. development of Ropeways and Alternate Mobility Solutions

Ministry has decided to look after the development of Ropeways and Alternate Mobility Solutions
By establishing a regulatory framework and allowing the entry of new technology and research into
this industry, the ministry's decision to oversee the development of ropeways and alternative
mobility solutions is expected to have a constructive effect on the industry. To make this possible,
the Government of India (Allocation of Business) Rules, 1961 have been amended and notified. This
means that in addition to construction, research, and policy in this field, the Ministry will be in
charge of developing ropeway and alternative mobility solutions technologies.
D. FASTag MADE MANDATORY
The Ministry agreed that all lanes of the charge plazas on National Highways would be declared as
"FASTag lane" with effect from midnight of February 15–16, 2021, marking a significant step toward
seamless vehicle flow. The action has encouraged fee payment in digital form, decreased waiting
times and fuel use, and allowed for easy access to fee plazas. Over 4.35 billion FASTags have been
distributed (as on 21 December, 2021). By November 2021, there were 106 crore rupees in average
daily collections from 71.38 lakh Electronic Toll Collection (ETC) transactions. Around 97% of the
country's population has a FASTag, and several toll booths have a 99% penetration rate.
There are currently 728 National and 201 State Highway Fee Plazas that support FASTag. According
to estimates, FASTag will save about 20,000 crore on fuel each year, saving valuable foreign currency
and benefiting the environment as well.
E. Launch of National Automobile Scrappage Policy
To hasten the implementation of the Voluntary Vehicle-Fleet Modernization Program (V-VMP) or
"Vehicle Scrapping Policy," MoRTH hosted the State Investor Summit in Gujarat. More than 400
potential investors attended the summit, including leading car OEMs, auto component producers,
steel producers, specialised recyclers, industry groups, operators of automated testing stations,
equipment suppliers, and start-ups. Additionally, seven MoUs were inked, 6 for the establishment of
RVSFs in Gujarat and 1 for Assam.

F. Funding Models and other policies to facilitate construction of National Highways

Modifications to the Model Concession Agreement (MCA) of TOT have been accepted, enabling
NHAI to carry out capacity augmentation in a specific portion of the Project Highway and small
improvement works in accordance with IRC standards at their expense. Users of the expressway
have the option to remove the clauses requiring them to provide passes for local traffic and District
Registered Vehicles. In the case of closed tolling projects under TOT, daily and monthly passes for
particular combinations of entry and departure locations were also permitted. Bidding documents
have been modified to comply with Rule 144(xi) of the 2017 GFR and the 2017 Revised Public
Procurement (Preference to Make in India) Order. Detailed Project Report (DPR) Consultancy
Services Request for Proposal (RFP) Document

G. TRAINING AND CAPACITY BUILDING

The Ministry has been collaborating with States, Car manufacturers, and NGOs to improve driving
instruction. A plan has been introduced to establish approved driving training facilities across the
nation's districts and support a programme for drivers of heavy commercial trucks to receive
refresher training. States and UTs are setting up model Institutes of Drivers Training and Research
(IDTR). The Ministry would offer one-time support up to a maximum of Rs. 1.00 crore under the new
DTCs programme, up to a maximum of 50% of the project cost.

2. KEY DEVELOPMENTS
One of the world's largest road networks is in India. Any nation that wants to experience rapid
economic growth must first have a well-maintained, reliable road system that covers the entire
nation. India collects cess, an excise levy on gasoline and high-speed diesel oil, to help pay for the
construction and upkeep of its national highways.
The Central Road Fund Act, 2000 was passed to give legal status to the Central Road Fund
established by the Parliamentary Resolution of 1988, which is used for the construction and upkeep
of national highways, the improvement of railroad crossing safety, and other related purposes. For
these purposes, a cess, an excise duty and a customs duty on motor spirit, also known as gasoline
and high-speed diesel oil, are levied and collected. Through the Finance Act of 2018, the Central
Road and Infrastructure Fund, 2000, has taken the role of the CRF Act, 2000.
The National Highways Authority of India has declared the use of drones for monthly video recording
of National Highway projects during all stages of development, building, operation, and maintenance
mandatory in order to improve transparency, uniformity, and use modern technology. The drone
video recording must be done by contractors and concessionaires in the presence of the team leader
and the supervision consultant.

• Land acquisition (LA) was not being permitted earlier for State road projects except for pre-
construction activities for ring-roads or bypasses or service roads along NHs. As a contribution by
States/UTs to their portion of the land costs, LA is now also permitted for the establishment of NHs.
This would make it easier for States to participate in or contribute to the cost of LA as planned under
the "Grand Challenge" method.

• Safety audits have been instructed at all phases of road development to lessen accidents.
• Union Shri Nitin Gadkari announced that Emergency Landing Facilities are being constructed at 19
other places to brace nation’s security.

• In 2020–21, up to 14 Wayside Amenities (WSAs) will be in use, and 15 WSAs will be under
construction. 142 WSAs are planned for development in 2021–2022. Three of these, including one in
Jammu & Kashmir, were among the 103 WSAs for which the NHAI requested bids and awarded 39 of
them. On the Delhi-Mumbai Expressway, there are up to 23 WSA sites, and there are 16 on
Brownfield NHs. The development of five WSAs has been transferred to the Ministry of Tourism.

2.1 ROAD DEVELOPMENT:

The Ministry has been entrusted with the responsibility of development of Road Transport and
Highways in general and construction & maintenance of National Highways (NHs) in particular. All
roads other than National Highways in the States fall within the jurisdiction of respective State
Governments. Though, this Ministry allots funds for expansion of State roads as under Central Road
aInfrastructure Fund (CRIF) scheme. Ministry has also taken up development of State Roads under
SARDP-NE and LWE Schemes. This Ministry is also accountable for developing standards and
specifications for roads and bridges in India in addition to acting as a repository of technical
information on roads and bridges.
The length of National Highways for which the Ministry of Road Transport & Highways, Government
of India responsible is 1,40,995 km

Development and Maintenance of National Highways:

The Government is implementing Bharatmala and National Highways Development Project (NHDP).

Bharatmala Phase-I (including subsumed National Highways Development Project (NHDP))

Under the Bharatmala Pariyojana, the Ministry has undertaken a thorough review of the NHs
network with a view to improving the efficiency of National Corridors, developing Economic
Corridors, Inter Corridors, and Feeder Routes, as well as integrating with Sagarmala, and developing
road connectivity to Border areas, coastal roads, including road connectivity for Non-Major ports.
The Golden Quadrilateral (GQ), North-South and East-West (NS-EW) Corridors, as well as the 26,000
km of economic corridors that the Bharatmala Pariyojana envisions developing, are planned to carry
the majority of the nation's road borne freight traffic. Additionally, about 7,500 km of feeder routes
and 8,000 km of inter corridors have been discovered to increase the efficiency of the NS-EW, GQ,
and economic corridors.
In order to reduce traffic congestion and improve logistical efficiency, the initiative calls for the
construction of elevated corridors, bypasses, and ring roads in 28 cities. Additionally, 125 choke
points and 66 congestion spots need to be improved. Furthermore, 35 places have been chosen for
the creation of Multimodal Logistics Parks in order to decrease congestion on projected Corridors,
improve logistic efficiency, and lower logistics costs of freight movements.
2.2 State PWD and Border Road Organization (BRO)

Development
For the current fiscal year 2021–2022, a sum of roughly Rs. 24,929 crore has been set aside for the
development of NH, which has been given to State PWDs. Up till December 31, 2021, states have
invested Rs. 19,157 crore.
Approximately Rs. 433 crore was set aside for the development of NH, which was given to BRO,
during the current fiscal year 2021–2022. Up till December 31, 2021, BRO spent Rs. 179 crore.

Maintenance
An amount of about Rs.911.06 crore was earmarked during the current year 2021-22, for the
maintenance of NH entrusted to State PWDs. States have spent Rs. 210 crore till 31.12.2021.

An amount of about Rs. 170 crore has been earmarked during the current year 2021-22, for the
maintenance of NH entrusted to BRO. BRO has spent Rs. 69.95 crore till 31.12.2021

2.3 DEVELOPMENT OF NATIONAL HIGHWAYS IN NORTH-EASTERN REGION

The Ministry has been paying special attention to the development of NHs in the North-
EasternRegion and 10 per cent of the total budget allocation is earmarked for NE region. The total
length of National Highways in North-East is 13,651 Km and these are being developed and
maintained by four Agencies- the State PWDs, BRO, NHAI and NHIDCL. 13,651 km in all, 11,735 km
are under the care of the NHIDCL and the relevant State PWDs, 882 km are under the management
of the NHAI, and 794 km are under the management of the BRO. No executing agency has been
given the task of completing the remaining 240 km.

National Highway Development Plan Phase-III, on which work has been finished, covers a 110 km
stretch of National Highway No. 44 in the State of Meghalaya (the Ratachhera stretch along the
border of Meghalaya and Assam).

Under the ISC & EI scheme, 22 projects of about Rs.1281 crore are work in progress

2.4 Project Development Cell (PDC)

The MoRTH has established a Project Development Cell (PDC) to develop resources for the creation
of an Investment Clearance Cell that will provide end-to-end support and facilitation for investors
and facilitate clearance at the Center and State level.
 2 BUDGET ANALYSIS

The Ministry of Road Transport and Highways formulates and administers policies for road transport,
and transport research.  It is also involved with the construction and maintenance of the National
Highways (NHs) through the National Highways Authority of India (NHAI), and the National Highways
and Infrastructure Development Corporation Limited (NHIDCL).   It also deals with matters relating to
road transport such as implementation of central legislation including the Motor Vehicles Act, 1988. 

In 2022-23, the Ministry of Road Transport and Highways has been allocated nearly Rs 68,000 crore
more than the revised expenditure in 2021-22. In absolute terms, this is the highest increase (from
revised estimates of 2021-22) among all ministries in 2022-23. Nearly all of this additional allocation
has been earmarked for investment in NHAI. After many years, NHAI will not have any borrowings,
and rely entirely on budgetary resources. As of November 2021, NHAI’s total debt stood at Rs 3.38
lakh crore.1 This is nearly 150% more than the allocation to NHAI in 2022-23.

This note looks at the proposed expenditure of the Ministry for the year 2022-23, its finances over
the last few years, and issues with the same.

In 2022-23, of the total allocation to the Ministry, the highest is towards NHAI at Rs 1,34,015 crore
(67%).3 This is followed by allocation towards roads and bridges at Rs 64,573 crore (32%).3

Table 2: Expenditure heads for the Ministry of Road Transport and Highways (in Rs crore)
Actual 2020- RE 2021- BE 2022- %
Major head 21 22 23 Change

NHAI 46,062 65,060 1,34,015 106%

Roads and bridges 53,112 65,707 64,573 -2%
Road transport and safety
231 229 356 56%

Secretariat 131 154 163 6%

Recoveries -376 0 0 0
Total 99,159 1,31,149 1,99,108 52%
Note: BE – Budget Estimate; RE – Revised Estimate. Percentage change is from RE 2021-22 to
BE 2022-23. Sources: Demands for Grants 2022-23, Ministry of Road Transport and
Highways; PRS.
NHAI: The central government develops and maintains NHs through the NHAI. In 2022-23, NHAI has
been allocated Rs 1,34,015 crore, which is 106% more than the revised estimate of 2020-21. Of the
budgeted amount, 75% (Rs 1,00,100 crore) will be provided from the Central Road and
Infrastructure Fund, 15% (Rs 20,000 crore) will come from the monetisation of the National
Highways, and the remaining 10% (Rs 13,915 crore) will be provided from the Permanent Bridge
Fees Fund

Roads and bridges: Expenditure under roads and bridges includes development of NHs,
projects related to expressways, increasing the number of lanes under various projects, and
development of road connectivity in left-wing extremism affected areas. In 2022-23, the
allocation towards roads and bridges is Rs 64,573 crore. This is a decrease of 2% over the
revised estimates of 2021-22.

In 2019-20 and 2020-21, the actual expenditure for roads and bridges exceeded the budget
estimates by 1% and 9% respectively. As per the revised estimates of 2021-22, the revised
allocation towards roads and bridges is estimated to again exceed the budget estimate by 9%.
In 2017-18 and 2018-19, the actual allocation was less than budget estimates by 9% and 8%
respectively.

Figure 4: Budget vs actual allocation towards roads and bridges (in Rs crore)

Note: Figures for 2021-22 are revised estimates.

 Sources: Ministry of Road Transport and Highways budget documents 2010-22; PRS.

Permanent Bridge Fees Fund (PBFF): Funds transferred to the PBFF relate to the revenue
collected by the government through: (i) fees levied for the use of certain permanent bridges
on NHs by motor vehicles, (ii) toll on NHs, and (iii) revenue share received on some PPP
projects. These funds are then released to the NHAI for the development of NHs entrusted to
it.3

For 2022-23, the transfer from PBFF is estimated at Rs 13,921 crore. 1 This is a 10% increase
from the transfer in 2021-22 at the revised estimates stage (Rs 12,670 crore).

Figure 1: Actual expenditure by the Ministry (in Rs crore) and year-on-year change (in%)

Note: Figures for 2021-22 are revised estimates. Sources: Ministry of Road Transport and
Highways budget documents 2010-22; PRS.

Figure 2: Actual expenditure as a percentage of Budgeted expenditure (in %)

 Note: Figures for 2021-22 use revised estimates Sources: Ministry of Road Transport and
Highways budget documents 2012-22; PRS.

Issues and Risks

4.1 Issues with Financing

The figure below highlights the share of total investment in the roads sector in India. 6 The
total investment in road sector has grown at a CAGR of 22% from 2014-15 to 2020-21. The
share of borrowings in this investment has grown from 6% in 2014-15 to 37% in 2020-21. In
2019-20, 43% of
the investment in roads sector was sourced from borrowings. Further, the share of budgetary
support declined from 57% in 2014-15 to 44% in 2019-20. In 2020-21, the budgetary support
to the roads sector has again increased to 56%.15,6 The share of private investment has also
declined from 37% in 2014-15, to only 7% in 2020-21.

Figure 7: Investment in road sector

 Sources: 312th Standing Committee Report (2022); PRS
The Standing Committee on Transport (2020) noted that increasing the gross budgetary support to
the Ministry while the private sector investment is declining may not be a sustainable growth plan.

4.2 Borrowings

After many years, no borrowing has been estimated for NHAI in 2022-23. Between 2017-18 and
2021-22, NHAI has been borrowing an average of Rs 63,300 crore per year. NHAI’s total debt
grew from Rs 1.22 lakh crore in March 2018 to Rs3.38 lakh crore in November 2021.
The Standing Committee on Transport (2020) had noted that NHAI’s debt has been increasing and as
of March 2020, the amount of debt NHAI had to repay was more than twice the annual budgetary
allocation of the Ministry for 2020-21. The Committee on Public Undertakings (2017) had also noted
several issues in the financial performance of NHAI such as: (i) insufficiency of funds, (ii) gap
between the funds allocated to the Ministry, and released to NHAI, and (iii) under-utilisation of
funds.

4.3 Private financing and Contracts

In its Annual Report (2018), NHAI had noted that the recent economic slowdown has led to lower
revenue realization than expected. Several developers had significantly leveraged their balance
sheets in anticipation of high revenue, and with lower revenue realization they face issues with debt
servicing. This also adds stress on the existing road infrastructure loan portfolios of financial
institutions.
It has been noted that private financing for the roads sector is a challenge. Several PPP Road projects
have not been able to attract bids. The major highway developers in the country are also facing
financial capacity constraints. Further, there is a lack of debt products that are aligned with the
revenue stream profile of highway projects (long- term projects where toll collection can begin only
after the entire project is completed). This makes financing of such projects difficult, and has
resulted in some projects getting stalled at the construction stage. This also discourages prospective
bidders.

Non-performing assets: The Standing Committee on Transport (2016) had observed that several
long term loans disbursed for the road sector are turning into non-performing assets (NPAs).Project
bids are often made without proper study, and projects are awarded in a hurry. This results in
stalling of projects, and concessionaires leave mid-way.
Banks and other infrastructure lending institutions have also been reluctant to finance the highways
sector. This has led to difficulties in debt servicing, putting additional stress on the road
infrastructure portfolios. Besides increasing the cost of the project, delays also make it difficult to
obtain additional debt

4.4 Project Delays and increase in Project Costs

The Committee on Public Undertakings (2017) had noted that from 1995, till June 2016, out of
the total 388 projects completed, only 55 projects were completed on or before time. Delays
in the completion of the projects were mainly attributed to: (i) the long time taken in land
acquisition, and obtaining environment and forest clearances, (ii) poor performance of
concessionaires due to economic slowdown, (iii) cash flow problems, and (iv) law and order
issues. The Ministry has also noted that recently projects have also been halted due to NCLT
proceedings against the developer. Such delays increase project costs, eventually making
certain projects unviable. As of December 2021, the cumulative cost overrun of projects in the
road sector is estimated to be greater than Rs 8,120 crore.

4.5 Increase in land acquisition costs

From January 1, 2015, the compensation for land acquired by NHAI is determined as per the Right
to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act,
2013. The Committee on Public Undertakings (2017) had noted that due to higher compensation
under the 2013 Act, the expenditure by the Ministry of Road Transport on land acquisition
increased from Rs 9,097 crore in 2014-15 to Rs 21,933 crore in 2015-16. In 2017-18, NHAI
spent more funds on land acquisition (41% of the expenses) as compared to project expenditure
(39%). The Standing Committee on Transport (2020) noted that the average rate of land
acquisition has increased significantly from about Rs 0.92 crore per hectare in 2013-14 to Rs 3.13
crore per hectare (ha) in 2019- 20 (an increase of 240%).

4.6 Investment in maintenance of roads

In 2022-23, the Ministry has allocated Rs 2,586 crore towards the maintenance of roads and
highways (including toll bridges). This is 7% lesser than revised expenditure on maintenance in
2021-22. In both 2018-19 and 2019-20, the actual expenditure on maintenance was less than
60% of the budget estimates (Figure 8).
Figure 8: Budget vs actual on maintenance (in Rs crore)

Sources: Ministry of Road Transport and Highways budget documents 2010-22; PRS.

4.7 Connectivity in remote areas

The Ministry also allocates funds towards the development of highways in areas with poor
connectivity. Some of these projects include the Special Accelerated Road Development
Programme in North East (SARDP-NE), Externally Aided Projects and Roads Projects in Left-
Wing Extremism Affected Areas.

In 2022-23, Rs 10,565 crore has been allocated towards the SARDP-NE project. This is a 25% annual
increase from the revised expenditure in 2021-22. Between 2017-18 and 2019-20, the fund
utilisation of the project has been consistently greater than 90%. In 2020-21, the actual
expenditure exceeded the budgeted expenditure by 17%. The Standing Committee on Transport
has repeatedly (2018, 2020) noted under-achievement of targets in SARDP-NE. 20,22 The Standing
Committee (2020) noted that projects in the north eastern region face delays of almost a decade in
completion. This causes inconvenience to the commuters, and also adds to the project cost
Table 4: Status of implementation of some n Budget (2020-21) announcements in roa
Unio sector
Budget Announcements Status of implementatio
Developing National Highways (NHs) in
various states
Developing 3,500 km of NHs in Tamil Nadu Project length of 125 km is completed
and 2,214 km is ongoing.
Developing 1,100 km of NHs in Kerala Project length of 632 km is ongoing.
Developing 675 km of NHs in West Bengal Project length of 21 km is completed,
1,194 km is ongoing.
Developing 1,300 km of NHs in Assam Project length of 20 km is completed,
743 km is ongoing.
Delhi-Mumbai Expressway: 260 km will be Out of the total length of 1,380 km,
awarded before 31.3.2021. 1,337 km length has been awarded for
construction. Of this, 450 km has been
completed, and 887 km is under
construction.
Developing flagship corridors in various
states
Bengaluru – Chennai Expressway: 278 km The complete corridor of 262 km has b
will be initiated in the current financial awarded in the month of September 20
year. Construction will begin in 2021-22.
Delhi – Dehradun economic corridor: 210 As on date, out of the 329 km complet
km corridor will be initiated in the current length of the corridor, 220 km has bee
financial year. Construction awarded for construction.
will begin in 2021-22
Kanpur – Lucknow Expressway: 63 km Bids for the Kanpur –Lucknow Expressw
expressway will be initiated in 2021-22. have been invited and in advanced sta
of land acquisition.
Chennai – Salem corridor: 277 km The flagship 277 km Chennai Salem
expressway will be awarded, and corridor is in pre-construction stage
with studies undertaken like Social
construction would start in 2021-22. Impact Assessment (SIA) to analyse and
create proper alternatives as per
guidelines of the Supreme Court.
Raipur – Vishakhapatnam: 464 km will be Out of the total corridor length of 464
awarded in the current year. Construction projects have already been awarded fo
will start in 2021-22. 356 km.
Amritsar – Jamnagar: Construction will As on date, over 260 km of the corrido
commence in 2021-22. has already been constructed. The
complete greenfield section of 762 km
from Sangriya to Santalpur and 63 km
brownfield section from Bhatinda to
Sangriya have been awarded.
Delhi – Katra: Construction will commence in Out of a total corridor length of 670 km
2021-22. 580 km has been awarded. The remain
stretches to be awarded in FY 2021-22