Huge debt servicing keeps NHAI in red

New Delhi: The National Highways Authority of India (NHAI) has become debt-ridden because huge funds have been raised by way of market borrowings, said a recent report of the Parliamentary committee on estimates for the Ministry of Road Transport & Highways.

“A huge portion of the expenditure in the last three financial years is related to debt servicing, which is further showing an increasing trend with every passing financial year,” the report said. The total debt of NHAI stood at around Rs2 lakh crore at the end of 2022-23.

Market borrowing is done through internal and extra budgetary resources (IEBR). It may be mentioned here that the government is conscious of the problem. This is the reason that the Interim Budget made no provision for borrowings by the NHAI. In fact, action began earlier, as funds through IEBR came down from Rs65,150 crore during 2021-22 to Rs797.58 crore during 2022-23 fiscal.

However, the committee was “concerned to note the burden of debt that NHAI is facing as a result of market borrowings and payment of interest thereon. It is of the view that corrective measures must be taken immediately to ensure that NHAI remain capable of repaying the debt without compounding the interest on delayed repayment.”

Lauding higher budgetary support from the government to revitalize the finances and overall functioning of the NHAI, it favoured private sector investment. The committee also urged the government to consider taking steps like increasing private sector investments in projects, speedy award of work for approved projects, and popularizing the NHAI Infrastructure Investment Trust (InvIT) bonds to further boost the finances of the NHAI, and recapitalize its balance sheet.

An InvIT is a collective investment scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return, says the website of the National Stock Exchange (NSE).

The InvIT is designed as a tiered structure with the sponsor setting up the InvIT, which in turn invests into the eligible infrastructure projects either directly or via special purpose vehicles (SPVs).