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To uphold transparency and sustainability, the government is expected to continue fully financing the substantial capital expenditure needs of the National Highways Authority of India (NHAI) and the Indian Railways for the next fiscal year, according to sources.
As a result, these two entities would abstain from market borrowing for funds, with NHAI avoiding it for the third consecutive year and the Railways for the second consecutive year. The government’s borrowing plan for the fiscal year 2023-24 encompasses the entire market funding requirement for both the Railways and NHAI.
A senior official indicated that the capital expenditure (capex) of these two entities is likely to be covered through the Budget in the coming year. This approach not only enhances transparency in the execution of the Centre’s plans but also ensures that the cost of funds for both entities is approximately 50 basis points lower compared to borrowing from the market.
For the third consecutive year, the government has provided substantial budgetary capital expenditure (capex) support to the Railways, allocating ₹2.4 trillion for FY24. This represents a 50% increase from the previous year and constitutes one-fourth of the Centre’s ₹10 trillion capex outlay.
In recent years, the Railways had typically borrowed ₹60,000-70,000 crore annually from the market for its funding needs, except in FY24.
Due to high debt, the Centre decided to suspend fresh borrowing by the National Highways Authority of India (NHAI) in FY23 and FY24. Consequently, NHAI’s budgetary support surged to ₹1.74 trillion in FY23, over three times higher than ₹57,350 crore in FY22.
