A kitty that funds roads even today

Mamuni Das | | Updated on: Dec 06, 2021

Vajpayee’s ‘dream’ project on NH-6 | Photo Credit: PARTH SANYAL

Vajpayee set up a mechanism to ensure flow of funds to strengthen the highway network

If there was one Prime Minister who had the vision to lay the path and connect the ends of this vast country, both in a literal and figurative sense, it was Atal Bihari Vajpayee.

During his stint as Prime Minister, heading the coalition National Democratic Alliance (NDA) government, he spearheaded the setting up of a mechanism to ensure assured flow of funds to strengthen the highway network.

Financing model

Vajpayee created a dedicated financing model for road infrastructure, imposing a cess on diesel and petrol in 1998-99. This ensured an assured funding for building roads and highways across the country.

This was further strengthened through an Act of Parliament, when the Government created a non-lapsable dedicated fund for National Highways Development Project, under the Central Road Fund Act 2000.

This flow of funds eventually led to a massive growth in the flow of goods and people on the road network, leading to the progress of overall highways ecosystem in the country.

This mechanism also helped National Highways Authority of India to leverage the cess accruals to borrow money from multilateral agencies and the market. Initially, the cess was ₹1 per litre, which has been increased several times over the years.

This cess method, not only made funds available for construction of roads across the country, but also strengthened the fund-raising mechanism of highway constructing agencies.

The National Highways Development Programme (NHDP) focused on developing and strengthening roads connecting the four metros, called the Golden Quadrilateral, and their diagonals called the North South East West corridor.

The move helped make roads much more navigable and resulted in a lot of traffic moving to the road sector.

Safety fund

Simultaneously, during the NDA regime, when there were several railway accidents, Vajpayee also ensured the creation of a dedicated non-lapsable fund — for the Railways — termed as special railway safety fund (SRSF), which ensured fund availability for a few years.

Reacting to the demise of the former Prime Minister, Transport Minister Nitin Gadkari said he got the opportunity to work closely with Vajpayee on implementing key projects such as the Golden Quadrilateral and Pradan Mantri Gram Sadak Yojana.

Published on August 16, 2018
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