Finance ministry's delay in releasing toll, fuel cess funds may hit highways.

NEW DELHI: The road transport and highways ministry has lodged a strong protest against the finance ministry's move to hold back the release of over Rs 2,700 crore collected through the cess on petrol and diesel and toll on highways.

The finance ministry's move to keep the twin receipts "in abeyance" was prompted by the economy measures introduced by it to ensure that the Centre does not overshoot the revised fiscal deficit target of 5.3% of GDP.

Of the "dues" from the October-December quarter, around Rs 1900 crore have been collected by the cess on diesel and petrol, which has been collected for several years to construct highways and rail overbridges. The funds are usually transferred to the Central Road Fund meant for the purpose. Similarly, officials told TOI that over Rs 875 crore collected as toll paid by highway users is also lying with the finance ministry.

With its finances in disarray, the road secretary A K Upadhyay has shot off a terse letter to finance secretary R S Gujral saying that the amount should be paid immediately.

Sources said the road ministry is of the view that toll remittances are pass-through payments collected by the National Highways Authority of India for public-funded projects. In addition, the ministry has reminded North Block that cess is levied for a specific purpose and cannot be treated as a general tax, an official said on the condition of anonymity.

In the run up to finalizing the expenditure for the current financial year, the finance ministry has pruned spending in the revised estimates, arguing that unspent allocations should be refunded and fresh sanctions should only be made after receiving utilization certificates. Besides, it has asked ministries to refrain from quarter-end rush of expenditure.

In fact, the finance ministry has been quite candid in telling investors that the short-term strategy for fiscal consolidation focuses on pruning expenditure.

The road ministry fears that by holding back on release of cess and toll receipts may hit the construction activity for project with 100% government funding that are being undertaken in engineering-construction-procurement (EPC) mode. Officials said the move was surprising as the government has approved construction and development of 4,000 km of projects under NHDP-IV through EPC mode.

The cess and toll are two assured entitlements for NHAI to carry out its work. Sources said NHAI has received about Rs 6,400 crore from the cess collected this year against the projection of approximately Rs 10,200 crore.

Similarly, it has got about Rs 1,800 crore as toll remittance against the annual projection of nearly Rs 3,800. "We have not received the third quarter release from the government and have no clue of the fourth quarter. Though deferred payment would not have that serious implication, we all know how difficult it is to get back that amount," said an official.

He added the Cabinet has given an assurance to the NHAI that the annual fuel cess will flow through budgetary allocation till such time that NHAI is free of its liabilities. The finance ministry's move is likely to have adverse impact on NHAI's borrowing programme in view of financial ratings being downgraded.


Source : timesofindia.indiatimes.com