While highways are regarded as one of the avenues for accelerating economic growth, the sector has been plagued by stalled projects, rising debt burden and lack of investor appetite. The Centre has relaxed rules to speed up highway development. The National Highways Authority of India (NHAI) has now approached the RBI to provide a fillip to the stressed highways sector. Bloomberg TV India caught up with NHAI Chairman Raghav Chandra.

Take us through what the key discussion points were and what RBI Governor Raghuram Rajan told you.

It was a very useful discussion because we were able to sensitise him about the difficulties related to fund flows and lending to the highways sector. Often banks raise the refrain that RBI classification and provisioning norms come in the way of fresh loans. So the Governor made it explicitly clear that as long as the classification and provisioning are done even for NPA accounts, fund infusion and lending could continue and they could raise fresh loans.

So this thing was a very positive clarification and they will be sending us the copy of the circular they had issued regarding that.

Another issue that we raised was about the securitisation of receivables from projects which have revenue surpluses. Again the RBI made it very clear that as long as the present lender NHAI were agreeable and there were surpluses, none of their guidelines would come in the way. And we asked for relaxation in the 5/25 scheme to make it easier. We also said the cost over-runs for projects be limited to 10 per cent of the EPC costs. They noted our suggestion and what we are doing on tolling. We have tied up with National Payment Corporation of India Ltd for setting up a National Clearing House. So he was very happy to note that. As we mentioned that the toll revenues are going down and sought lending support to the concessionaires and to the highway development sector, he said perhaps the toll should be linked not to the wholesale price index (WPI) but to the consumer price index (CPI). So we hope with this discussion, the difference of perception between the RBI and banks is getting resolved.

You are seeking priority sector status for highways, citing the fact that it has a multiplier impact on the economy. What is the status on that?

That is a major policy issue and a discussion does not suffice for that. But certainly we raised the pitch and we explained why the highway sector is so important. It is fundamental to the existing priority sectors — agriculture, small-scale enterprises, rural development sector.

You cannot have agriculture markets unless you give priority to highways. So, he noted all those things and certainly it would help to attract the policy attention in the right direction.

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