The Union Road Transport and Highways Ministry will tap the capital markets to fund its road projects as majority of its current funding comes from budgetary grant according to the market research company‘s report
The minister said the government will offer a fixed return of 8% to retail investors. It will be higher than what they can get from banks, but lower than what they could earn if they invested themselves.
The industry and government have identified the truck sector as a major growth area. The Minister said that immense potential in the field of trucking and heavy commercial vehicles has been identified in several states of the country, while 100 percent indigenous component manufacturing is done through public sector undertakings (PSUs) and state-owned firms.
The finance minister said that since he doesn’t have any financial resources problem and neither will the government, they will commit to offering 8% return on investments of Rs 1-2 lakh. The government is looking for a way to pull in new investors into the capital markets so that they can start tapping sources of revenue other than borrowing from lenders.”
The Transport & Highway Minister said that he expects the high cost of fuel to continue until the end of this year. This will put added pressure on the construction industry, especially over the next few months when contracts are being signed and work is being done on one hand, and on the other hand prices are rising.
The cost of diesel has risen to as high as 10% of the total construction costs. The cost efficiency of construction is very important, and the price increase in crude oil poses a serious threat to the industry.
Transport and Highway Minister said the cost of diesel is very important to determine the cost of a contract. The Minister did not say if he wanted a diesel tax rate, but emphasized that high diesel costs are a problem for transportation companies, who cannot afford the price for diesel that is needed for operations.”
As the roads ministry gears up for an ambitious plan of building the Bharatmala highway, the transport and highways minister said that if construction cost of a road contract is ₹1,000 crore, then the fuel cost comes to ₹80-100 crore.
Transport & Highway Minister said that instead of making diesel engines, manufacturers can make petrol ones and switch from diesel to flex-fuel engines (which can use biofuels such as ethanol).
He said that electric, hydrogen and biofuels are the fuels of the future. He suggested the government to set up a similar organisation for the construction equipment makers that uses futuristic planning to encourage research and development in the sector.
