This implies that both these entities, NHAI for the third consecutive year and Railways for the second, will not seek funds from the market. The government’s borrowing plan for FY24 encompasses the entire market funding requirement for both Railways and NHAI, emphasizing its commitment to transparency and sustainability. According to sources, the Centre is expected to continue fully covering the substantial capital expenditure needs of the two major state-run transport infrastructure entities in the coming financial year. A senior official noted that the capital expenditure for both entities is likely to be handled through the budget, ensuring transparency and cost-effectiveness. Direct government borrowing will result in approximately a 50 basis points lower cost of funds for both entities compared to market borrowing. In FY24, the government significantly increased budgetary capital expenditure support for Railways to INR 2.4 trillion, a 50% YoY increase, constituting one-fourth of the Centre’s INR 10 trillion capex outlay. While Railways typically borrowed INR 60,000-70,000 crore annually from the market in recent years, this trend changed in FY24. The Centre’s decision to suspend fresh market borrowing by NHAI in FY23 and FY24 due to high debt levels led to a substantial increase in budgetary support, reaching INR 1.74 trillion in FY23, over three times higher than the INR 57,350 crore in FY22. NHAI’s debt surged from INR 23,797 crore in March 2014 to INR 3.48 trillion in March 2022, driven by ambitious highway expansion initiatives initiated by the Modi government in 2014.

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