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Construction : Web Exclusive | February 2018 | Source : CW-India

Central Road Fund’s expansion unlikely to affect allocations to the road sector

The recent amendments to the Central Road Fund Act, 2000 makes it more flexible and allocations would now depend on priority of the infrastructure projects. However, given the high fund requirements for the ambitious new road development programme, the surplus for other sectors is expected to remain minimal: ICRA.

With the remaining portion of the National Highway Development Programme (NHDP) getting subsumed into the new road-development programme (83,000 km including Bharatmala Phase-I) and a significant portion of the Pradhan Mantri Gram Sadak Yojana (PMGSY) set to be concluded by 2019, the government intends to deploy the central road fund (CRF) in other infrastructure sub-sectors. Starting with national waterways in June 2017 (refer to the chart on CRF allocations); the scope of deployment of the CRF has been significantly expanded in the Finance Bill, 2018, by adding other infrastructure sub-sectors (as per the revised harmonised master list of infrastructure sub-sectors as of April 2016). So, the CRF was renamed as the Central Road and Infrastructure Fund (CRIF).

Explaining further, Shubham Jain, Vice President & Sector Head, Corporate Ratings, ICRA, says,  “While the intent of the scope expansion is positive, the deployable surplus in the newly added infrastructure sub-sectors could be paltry. For the new highway development programme involving 83,000 km, the erstwhile CRF was estimated to fund Rs 237,024 crore (34 per cent) out of the total Rs 6,92,324 crore during FY2019-FY2022. The annual requirement (assuming equal distribution over four years) from CRIF would be around Rs 59,256 crore – implying 52 per cent of the CRIF projected for FY2019 (refer to the chart on CRIF receipts). But in the event of crude prices moving up, there could be limited head room for the government to further increase the road and infrastructure cess. In such a scenario, the existing 39 per cent earmarked for the national highways itself would not be sufficient to fund the ambitious programme.”

ICRA expects the funding requirement for rural roads through the CRIF may be lower than the current levels which could be used for other purposes. Another significant inclusion in the bill is doing away with fixed apportionment of the CRIF. The apportionment of fund to each of the infrastructure sub-sectors would be finalised by a committee headed by the Finance Minister, depending on the priorities of the project. This would enable the government to deploy the unutilised portion of funds earmarked for rural roads in National Highways and other high priority infrastructure subsectors like affordable housing, healthcare infrastructure etc.

The Budget for FY2019 has proposed to levy of a road and infrastructure cess of Rs 8 per litre on petrol and high-speed diesel oil while abolishing the additional excise duty of Rs 6 per litre. Further, the basic excise duty on both branded and unbranded petrol and diesel has been slashed by Rs 2 per litre so that it would have no impact on the end users of fuel. This road and infrastructure cess, estimated at Rs 113,000 crore would flow into the CRIF in FY2019.

Annexure I: Category of projects and infrastructuresub-sectors under CRIF


Infrastructure sub-sectors


a)      Roads and Bridges

b)      Ports (including Capital Dredging)

c)      Shipyards

d)     Inland waterways

e)      Airports

f)       Railways (terminal infrastructure, station, adjoining commercial infrastructure in addition to existing ROB, RUB etc.)

g)      Urban public transport (except rolling stock)


a)      Electricity generation

b)      Electricity transmission

c)      Electricity distribution

d)     Oil pipelines

e)      Oil/gas/LNG storage facilities

f)       Gas pipelines

Water and sanitation

a)      Solid waste management

b)      Water supply pipelines

c)      Water treatment plants

d)     STP

e)      Irrigation (dams, channels etc.)

f)       Storm water drainage system

g)      Slurry pipelines


a)      Telecommunication (fixed network including optic fibre/wire/cable)

b)      Telecommunication towers

c)      Telecommunications and telecom services

Social and commercial Infra

a)      Education Institutions

b)      Sports and infrastructure

c)      Hospitals (including medical colleges, diagnostic centers)

d)     Three-star or higher category classified hotels

e)      Ropeways and cable cars

f)       Common infrastructure for industrial parks – like food parks, SEZs etc

g)      Post-harvest storage including cold storage

h)      Terminal markets

i)        Soil-testing labs

j)        Cold-chain

k)      Affordable housing (including housing project using at least 50% of floor area ratio/FSI for dwelling units with carpet area of not more than 60 sq meters


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