Central Road Fund

The Central Road Fund was established by the Parliament by law (Central Road Fund Act 2000)  in order to fund the development and maintenance of National highways, State highways and Rural roads.

Establishment of Fund

The fund was first established by the Resolution of Parliament passed in 1988. The Central Road Fund Act, 2000 gave the statutory status to the fund.

How it is financed?

In order to mobilise the fund, the Central Road Fund Act 2000 proposed to levy and collect by way of cess, a duty of excise and duty of customs on petrol and high speed diesel oil.

Presently Rs. 2 per litre is collected as cess on Petrol and High speed Diesel oil.

Fund Utilization

The fund is utilised for the development and maintenance of National highways, State roads, Rural roads and for provision of road overbridges/under bridges and other safety features at unmanned Railway Crossings.

The cess of Rs. 2 is being distributed as under –

1. Cess of Rs. 0.5 per litre to be entirely allocated for development and maintenance of National Highways.
2. Cess of Rs. 1.50 to be allocated in

• 50% of high speed diesel (HSD) oil cess for development of rural roads
• 50% of cess on HSD and the entire cess collected on petrol to be allocated as

1. 57.5 % of such sum for the development and maintenance of National highways
2. 12.5% for construction of road under or over bridges and for safety works at unmanned railway crossing
3. 30% on development and maintenance of State Roads. Of this amount, 10 % shall be reserved by the Central Govt. for implementation of State Road Schemes of Inter-State Connectivity and economic importance to be approved by central govt.
4. Some states and districts have established road funds other than Central Road Funds in order to cater to local road network maintenance and development.

Inter State Connectivity and Economic importance scheme

To promote the Interstate connectivity scheme and in order to assist states in economic development through better connectivity, the Central government provides a 100 % grant for interstate connectivity projects and a 50 % grant for the projects of economic importance. The fund under the scheme will be financed through the Central Road Fund as mentioned above.

Criticism

It is being said that the large portion of the fund remain unutilized. However the statistics shows that the southern states have utilised the fund in better way than the northern states. The under utilisation is due to the slow progress of the projects and low proposals from the states. The other grounds on which the fund is being criticised are inappropriate allocation and mismanagement of Fund.