Indian Economy News

CCEA approves Rs12,646 crore for six highway projects

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  • March 5, 2015

New Delhi: The cabinet committee on economic affairs (CCEA) on Wednesday approved six highway projects totalling 712km with an investment of Rs.12,646 crore.

These projects, to be awarded under the engineering, procurement and construction (EPC) model, are divided into 10 packages under the national highways development project in states such as Uttar Pradesh, Madhya Pradesh, Odisha, Himachal Pradesh and West Bengal, the government said in a statement.

Under the EPC model, the government pays a contractor to build a project awarded through competitive bidding.

This comes in the backdrop of the National Democratic Alliance government trying to revive private investment in the roads sector. The entry of private sector firms is key to the government realizing its target for constructing roads.

It is estimated that the government requires nearly Rs.2 trillion to fund 20,000km of road construction under the national highways development project over the next four to five years.

In another decision, the CCEA extended the subsidy on domestic cooking gas, kerosene distributed through the public distribution system (PDS) and freight for their transport to far-flung areas. While petrol and diesel prices have been deregulated, prices of domestic cooking gas and kerosene are set by the government.

In sync with the government’s strategy of trimming subsidies by using technology and direct cash transfers to plug leakages, finance minister Arun Jaitley on Saturday slashed the petroleum subsidy by half. The petroleum subsidy is estimated at Rs.30,000 crore for 2015-16, a cut of 50.22% from the revised estimate of Rs.60,270.00 crore for 2014-15. The Union Budget earmarked Rs.22,000 crore for the subsidy on domestic cooking gas and Rs.8,000 crore for kerosene.

“The government was providing a subsidy of Rs.22.58 per 14.2kg LPG (liquefied petroleum gas) cylinder and Rs.0.82 per litre on PDS kerosene and Domestic LPG Subsidy Scheme, 2002. Besides, freight subsidy was also being provided to PDS kerosene and domestic LPG consumers in far-flung areas under the Freight Subsidy (for far-flung areas) Scheme, 2002. These two schemes ended on 31st March 2014,” the government statement added.

The total cost of selling fuel below cost to be borne by oil marketing firms next fiscal year is estimated at Rs.42,500 crore.

“Subsidies are needed for the poor and those less well-off. What we need is a well targeted system of subsidy delivery. We need to cut subsidy leakages, not subsidies themselves. We are committed to the process of rationalizing subsidies based on this approach,” Jaitley had said in his budget speech on Saturday.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.