Expect Enhanced Budgetary Allocation for Bharatmala Project: ICRA

Total budgetary allocations to fund Bharatmala programme is estimated at Rs 3,43,045 crore over FY2019-2022

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Terming the next fiscal crucial for Bharatmala and allied highways programme, rating agency ICRA has said it expects the budgetary allocation to increase to Rs 1.01 lakh crore.

Total budgetary allocations to fund the ambitious new highway development programme is estimated at Rs 3,43,045 crore over FY2019-2022 –- averaging around Rs 86,000 crore per annum.

"ICRA expects the allocation to increase ... to Rs 1.01 lakh crore. With Bharatmala and allied programmes facing funding challenges (involving Rs 6.92 lakh crore outlay); investors expect funding road map for the ambitious National Infrastructure Pipeline which involves outlay of around Rs 19.38 lakh crore over next five years (FY2020-2025)," the rating agency said in a statement.

Given the limited fiscal headroom, the fiscal deficit targets are expected to be relaxed to meet the huge funding requirements for productive asset creation; failing which both the Bharatmala and the NIP could get jeopardised, it said.

The fact that the BOT (Toll) awards have been at low levels in last five years (compared to the past where most of the awards were through the BOT (Toll) route is a reflection of the reduced risk appetite for the private sector, it said.

The road network itself is undergoing significant changes with some of the economic corridors under Bharatmala competing with few existing stretches, it added.

"Overall, these factors would make the traffic forecasting extremely challenging. Therefore, BOT (Toll) model in its current form may not have many takers till the developers are adequately compensated for such losses on account of new competing programmes - which remained unaddressed in the recently published modified model concession agreement," ICRA said.

Achieving financial closure also would be a challenge given these uncertainties, it said and added that a complete overhaul of existing BOT (Toll) concession framework with balanced risk sharing is the need of the hour for revival of private sector interest.