In the last two decades, road infrastructure in India progressed tremendously. Both the NHDP and Pradhan Mantri Gam Sadak Yojana are coming to the conclusion phase. An important factor that enabled the country to fuel the ‘road revolution’ was support from internally generated funds to finance such projects. The most important of such financing source was the Central Road Fund (CRF).
The Central Road Fund (CRF) is a non-lapsable fund created under Central Road Fund Act 2000. It is procured out of the out of cess/tax imposed by the Union Government on the consumption of Petrol and Diesel. CRF should be used to develop and maintain National Highways, State roads (that have economic importance with inter-state connectivity), rural roads, railway under/over bridges etc, and national waterways (waterways from 2017 onwards only). A welcome and interesting trend about the CRF is that its revenue is increasing at a significant pace during the last few years. This has helped the government to finance various road development projects with much ease.
Table: receipts under CRF in recent years
|Year||Revenue in Rs crores|
Source: Figures for the first three years are from the written statement in the RS whereas figures for 2016-17 is from the statement made by Minister, MORTH. The figures for 2017-18 is as per budget predictions.
Source of Fund
Funds to the CRF are obtained from cess imposed on petroleum products – diesel and petrol in the following way.
- An Additional Duty of Customs (import tax) and
- Additional Duty of Excise (tax on production) –
These taxes are levied as cess on both petrol and diesel under the CRF Act 2000. Additional excise duty of Rs 2 is imposed as road cess on both petrol and diesel. According to a written reply made in the Parliament, Minister for Finance Santosh Kumar Gangwar informed that Rs 6 is obtained from each litter of diesel and petrol sold in the country towards CRF as additional duty of excise during 2016 -17.
Total tax revenue under CRF reached an all-time high of Rs 80800 crores during the year. This means that besides the road cess that is imposed as additional duty of excise, higher proportion of the additional duty of excise and customs are going to the CRF.
Accommodation of CRF
There is a procedure for accruing and spending of the CRF. Firstly, the revenue collected through cess under CRF Act is initially credited to the Consolidated Fund of India. After adjusting for the cost of tax collection, it is credited into the Central Road fund (CRF).
Distribution of CRF
The distribution of CRF is mainly for the development of roads in India. From 2000 onwards, the Fund has been used for developing road projects. Fund is also transferred to Ministry of Railways for the construction of over bridges etc., that are linked to roads. In 2017, the CRF Act is proposed to be amended to give 2.5% share for the development of national waterways. In essence, the CRF amount is distributed amongst four Ministries i.e. Ministry of Road Transport and Highways (MORTH – for funding National Highways), Ministry of Rural Development (for funding PMGSY), Ministry of Railways (for funding railway bridges that has connected with roads) and Ministry of Shipping (for the development of National Waterways, after the 2017 CRF Amendment Act) in the manner prescribed under Central Road Fund Act, 2000.
Utilization of the Central Road Fund
The CRF Act 2000 clearly gives guidelines about the utilization of the money.
- development and maintenance of national highways;
- development of the rural roads;
- development and maintenance of other State roads including roads of inter-State and economic importance;
- construction of roads either under or over the railways by means of a bridge and erection of safety works at unmanned rail-road crossings; and
- disbursement in respect of such projects as may be prescribed by the Government.
Similarly, the Act’s 2005 amendment instructs about the use of Rs 2 road cess collected from the sale of petrol and diesel. At present, Rs.6 per litre of the Basic Excise Duty is accrued to the Central Road Fund.
The Central Road Fund (Amendment) Bill, 2017
The CRF Act is proposed to be amended in 2017 and to sanction 2.5% of the CRF for the development of the inland waterways. The Bill defines national waterways as those that have been declared as ‘national waterways’ under the National Waterways Act, 2016. Currently, there are 111 waterways under the 2016 Act. The proposed amendment will decrease the allocation of cess towards the development and maintenance of national highways from 41.5% to 39%.