JOIN USRe 1 cess per litre on petrol, diesel on the cards
Making the recommendations, Transport Minister Kamal Nath has also suggested the creation of a separate Road Finance Corporation (RFC) to extend credits to NHAI, state governments, public sector agencies, private constructors to pave national and state highways.
Fully owned by the centre, the company will have an authorised share capital of Rs 10,000 crore with the cess collected through fuel acting as additional income. The minister also recommended service tax exemption for maintenance of highways and for certain works like resurfacing, renovation, strengthening, relaying and filling of potholes to attract more companies for road building activities. Currently, service tax exemption is given only to some of the maintenance works such as widening, laying of new roads and changing road surface.
The Ministry also urged the Finance Ministry to provide customs duty exemption for import of road construction equipments. The minister set the agenda for laying of 7,000 km of highways every year and promised to overhaul the organisational structure of his ministry. He has also plans to increase the target for road construction from the present rate of 4 kilometres per day to 15 kilometres per day.
Constructions of new highways under build operate and transfer basis was stalling as companies did not participate in the bidding process. Liquidity crunch due to the economic slowdown and increase in construction cost are thought to have contributed to the delay. The situation showed no sign of improvement, despite the government’s promise of providing viability gap funding.