Centre opens fuel cess fund tap to entire infra sector

Business Line
February 04, 2018

 

A corpus will be created through the new road and infrastructure cess on petrol, HSD. Port projects, including channel-deepening works or capital dredging and shipyards, will be able to access funds from a corpus created through a new ₹8 per litre road and infrastructure cess on petrol and high-speed diesel announced in the Budget.

The existing Central Road Fund Act (CRF Act) will be amended and re-named as Central Road and Infrastructure Fund Act to facilitate the change.

Other beneficiaries


Other infrastructure projects that can benefit from the corpus include post-harvest storage infrastructure for agriculture and horticulture produce, including cold storage and cold chain (including cold room facility for farm level pre-cooling, for preservation or storage of agriculture and allied produce, marine products and meat).
The Central Road Fund (CRF) was enacted in the year 2000 through a cess on petrol and high-speed diesel (starting with ₹1 per litre and rose to ₹6 per litre) to part fund construction of national highways, rural roads, state highways, railway over bridges/under bridges, erection of safety works at unmanned rail-road crossings, new lines, conversion of existing standard lines into gauge lines and electrification of rail lines.
In 2017, the government amended the CRF Act to allocate 2.5 per cent of the proceeds of CRF for development and maintenance of national waterways (NWs) through a reduction in the share provided for development of national highways.
The fund collected under CRF — a non-lapsable fund — was ₹80,800 crore in 2016 -17, ₹69,540 crore in 2015-16 and ₹25,122 crore in 2014-15, according to the Finance Ministry.
The existing ₹6 per litre cess on petrol and diesel has been abolished. “The new cess would help expand the scope of utilisation of the proceeds to the entire infrastructure sector and not just roads, highways and waterways,” a shipping, road transport and highways ministry official said. “Infrastructure is the growth driver of economy,” Finance Minister Arun Jaitley said in his Budget speech.
“Our country needs massive investments estimated to be in excess of ₹50 lakh crore in infrastructure to increase growth of GDP, connect and integrate the nation with a network of roads, airports, railways, ports and inland waterways and to provide good quality services to our people,” he said.

Sharing of the Fund

The share of the expanded Central Road and Infrastructure Fund to be apportioned to each infrastructure projects will be finalised by a committee, constituted by the Centre, headed by the Finance Minister, depending on the priorities of the project, according to Budget documents.
The Fund can also be used by airports, urban public transport (except rolling stock in case of urban road transport), solid waste management, water supply pipelines, water treatment plants, sewage collection, treatment and disposal system, irrigation (dams, channels, embankments), storm water drainage system, slurry pipelines, telecommunication (fixed network, including optical fibre/wire/cable networks which provide broadband/internet), telecommunication towers, telecommunications and telecom services, education institutions (capital stock), sports and infrastructure (including provision of sports stadia and infrastructure for academies for training/research in sports and sports-related activities), hospitals (capital stock including medical colleges, para medical training institutes and diagnostic centres), tourism infrastructure- three-star or higher category classified hotels located outside cities with population of more than one million, ropeways and cable cars.
Common infrastructure for industrial parks and other parks with industrial activity such as food parks, textile parks, special economic zones, tourism facilities and agriculture markets, terminal markets, soil-testing laboratories and affordable housing (including a housing project using at least 50 per cent of the Floor Area Ratio (FAR)/Floor Space Index (FSI) for dwelling units with carpet area of not more than 60 square meters can also avail themselves of the fund .
Reference-


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