The Hindu Business Line : `Specify limits for using fuel cess to repay loans'

New Delhi March 20 With the recent Government decision to allow using the fuel cess to repay loans taken for building rural roads, a Parliamentary Standing Committee has recommended that the Government should also fix a ceiling to ensure that most of the funds allocated for rural roads are not used for repaying loans only.

In order to expand the scope of road cess collected from motorists to finance rural road projects, the Minister of Road Transport and Highways had introduced the Central Road Fund (Amendment) Bill, 2006 in the Lok Sabha in December, to amend the Central Road Fund (CRF) Act, 2000.

The Amendment Bill sought to change the Act to enable the Central Government to raise funds for development of rural roads and it may use the share of funds for the repayment of any loan taken for the development of rural roads in any State or Union Territory.

This was required because the CRF Act does not have any provision for borrowing for rural roads and utilisation of the proceeds of future cess for repayment of loans.

RECOMMENDATIONS

The Standing Committee on Transport, Tourism and Culture, to which the CRF (Amendment) Bill was referred to, has stated that the ceiling on quantum of loan to be taken and the manner of repayment should be clearly specified in the Bill itself.

The committee feels that there is no such provision to put a check on the powers of borrowing of the Government and a situation should not arise when most of the proceeds of the fund are being utilised for repayment of loans only.

SPECIFY INSTRUMENTS

Moreover, the committee has recommended that modes of borrowing should be specified in the Bill such as borrowing from public finance institutions, private sector institutions, issuing public bonds, and borrowing from international agencies. "This will prevent misuse of the provision at any given point of time," it has stated.

It pointed out that while at the Central Government level, the CRF is non-lapsable in nature over the years, the same does not hold true at the State Government level. This treatment at the State Government level violates the spirit of CRF Act.

In this backdrop, the committee has called for some level of flexibility to ensure that State Governments get their share of funds as and when they comply with stipulated conditions — in case the unused funds allotted to them lapses during the fiscal owing to failure the State's part to meet some parameters.

More Stories on : Roadways | Rural Development | Taxation

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`Specify limits for using fuel cess to repay loans'