NHAI Debt Set to Fall Below Rs 2 Lakh Crore by March
The National Highways Authority of India (NHAI) is making significant strides in reducing its debt burden. Borrowings that peaked at nearly Rs 3.5 lakh crore in the 2021-22 financial year are now projected to drop below Rs 2 lakh crore by March this year. This marks a substantial improvement in the authority's financial health.
Centre Takes Direct Control of Highway Funding
A key driver behind this debt reduction is the Centre's decision to directly fund highway projects. Instead of relying on NHAI to borrow money, the government is now providing direct budgetary support. This shift began in 2022-23, when concerns arose about the highways authority facing potential bankruptcy.
Since then, NHAI has not taken on any new borrowings. The move has effectively halted the accumulation of fresh debt, allowing the authority to focus on repayment.
Increased Budgetary Support and Monetization Efforts
Budgetary support from the Centre has seen a dramatic increase. It rose from Rs 45,945 crore in 2020-21 to approximately Rs 2.1 lakh crore in the current financial year. This enhanced funding reduces the need for NHAI to rely on external loans.
Additionally, NHAI has actively monetized its operational roads. Over the last five years, this strategy helped repay and pre-pay around Rs 1.3 lakh crore. Data accessed by TOI indicates that the monetization program is expected to generate about Rs 30,000 crore this year alone.
Substantial Repayments and Future Plans
Official data reveals that NHAI made its highest principal repayment of Rs 23,330 crore in 2021-22. In a significant move last financial year, the authority repaid Rs 86,000 crore in one go. This included Rs 50,000 crore in loans taken from the National Small Savings Fund (NSSF).
Officials confirm that the trend of reducing debt will continue. NHAI aims to repay and pre-pay a substantial portion of its current borrowings over the next four to five years.
Negotiations Lower Interest Burden
Negotiations with banks have yielded positive results for NHAI. Over the last two years, these talks helped reduce the cost of debt by about 80 basis points. This reduction translates to savings of over Rs 3,500 crore on interest payments.
An official stated, "We are talking to institutional lenders for further prepayment of loans. We are hopeful of bringing down the debt liability below Rs 2 lakh crore during the current fiscal year."
Reduced Spending Allows for More Prepayments
With NHAI's spending on projects decreasing due to fewer project awards, the agency now has room to prepay more loans. People familiar with the developments estimate that prepayments in the range of Rs 40,000 to Rs 50,000 crore could occur by March.
This financial strategy not only alleviates the debt burden but also positions NHAI for more sustainable growth in the coming years.
