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Highways Construction to Accelerate With Budgetary Initiatives

  • Highways construction is set to get a major boost with initiatives like permission to raise tax-free bonds and reduction in withholding tax to 5 per cent on overseas borrowings in 2012-13.Besides, higher budgetary allocation of Rs 25,360 crore and other initiatives would also help the government's ambitious target of building 20 km of roads a day.

  • "The allocation of the Highways Ministry has been enhanced by 14 per cent to Rs 25,360 crore in 2012-13," Finance Minister Pranab Mukherjee said while tabling the 2012-13 Budget in Parliament, and proposed a construction target of 8,800 km for the fiscal.The Finance Minister proposed allowing highways regulation NHAI to raise Rs 10,000 crore through issuance of tax-free bonds, a step welcomed by Road Transport and Highways Minister C P Joshi.

  • "Tax-free bonds of Rs 10,000 crore have been given again to the National Highways Authority of India for 2012-13. This bond issue will help us in financing the phase IV projects of two lanes in less developed parts of the country and also to meet the increased cost of land acquisition," Joshi said.The Finance Minister this year doubled the limit of issuance of tax-free bonds to Rs 60,000 crore this fiscal to finance road projects.

  • "We plan to launch EPC (engineering, procurement and construction) projects in big way in the next fiscal so the permission to raise Rs 10,000 crore through bonds will be a big relief for NHAI and it will help us in achieving our increased targets and expectations," said Member, Finance, NHAI J N Singh.

  • For encouragement to PPP in road construction projects, Mukherjee allowed external commercial borrowings (ECB) for capital expenditure on the maintenance and operations of toll systems for roads and highways. Besides, the Finance Minister slashed withholding tax from 20 per cent to 5 per cent on overseas fund-raising.

  • "ECB for maintenance and operation of BOT toll roads will encourage PPP in road projects. Measures regarding tunnel equipment are welcome," Road Minister Joshi said.Full exemption from customs duty has also been extended to equipment imported for road construction projects, including tunnel excavation and specified lining equipment.

  • Finance Minister exuded confidence that the Highways Ministry will achieve "its target of awarding projects covering a length of 7,300 km under NHDP during 2011-12."This would be 44 per cent higher than the best ever length of 5,082 km awarded in 2010-11.Mukherjee said of the 44 projects awarded during 2011-12, 24 projects have fetched a premium.

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