Road and infra cess: Govt looks to raise ₹1.13-lakh crore next fiscal

The government expects to raise ₹1.13-lakh crore through the road and infrastructure cess next financial year. This will be almost ₹30,000 crore more than the collections it expects to make this year on account of road cess till January, and road and infrastructure cess in February and March.

For the current financial year ending March, the Centre expects to collect ₹81,250 crore in central road fund and ₹4,350 crore through road and infrastructure cess in the remaining two months. Finance Minister Arun Jaitley has proposed replacing the road cess with a road and infrastructure cess, through the Finance Bill last week.

The road cess was originally created in 1998-99 as a non-lapsable, dedicated fund to make roads. It was collected from users of diesel and petrol by levying an extra cess on the amount of fuel they bought.

The non-lapsable pool of funds was subsequently adopted as a law called the Central Road Fund (CRF) Act 2000, with a levy of just one rupee a litre each on diesel and petrol. The fund was envisaged to be used for various kinds of road construction including national highways, rural roads, inter-State connectivities and road over-and under-bridges at the unmanned level crossings of rail tracks.

The size of this fund has grown over the years due to two factors — increase in levy amount and more vehicles guzzling fuel.

The levy amount itself has risen over the years — touching ₹6 a litre in January. In the Budget, the road cess has been replaced by road and infra cess and the levy amount has been increased to ₹8 a litre. This change in duty on fuel came into effect from February 2.

The fund collections were in the range of ₹5,752 crore in 2004 fiscal, trebling over the next 10 years to ₹19,600 crore in fiscal 2014.

After 2014, the collections ballooned, as the international fuel prices dipped and government took to increasing the duties. In the next three years, the collections trebled touching ₹62,400 crore in fiscal 2017, according to Budget documents. At the end of the current fiscal, the government hopes to collect over ₹85,000 crore as per revised estimates.

User pool

The changing of name — from road fund to road and infrastructure fund — will expand the user pool manifold as the list activities that count as infrastructure is much bigger. There are five broad categories — transport and logistics, of which roads and bridges is a part; energy, water and sanitation, communication, social and commercial infrastructure. These five broad categories have 55 sub-categories, all of which can have benefit from the total fund. The Central Government will constitute a committee by notification for finalising the apportionment of the share of the Fund to each of infrastructure projects, says the Budget document.

The move has come even as a Transport, Highways and Shipping Ministry proposal to widen the ambit of usage by extending a portion to inland waterways is awaiting approval in the Rajya Sabha.

The proposal was to earmark 2.5 per cent of Central Road Fund for developing National Waterways by reducing the share of NH cess from 41.5 to 39 per cent. The CRF (Amendment) Bill, 2017 was passed in the Lok Sabha on December 19, 2017.