Finance Minister Nirmala Sitharaman may increase the budget allocation for the Ministry of Road Transport and Highways (MORTH) by 6 percent. It can allocate Rs 2.9 lakh crore for highways. Several officials with knowledge of the matter told Moneycontrol this. In the last 10 years, the allocation of the Highways Ministry has increased almost 8 times. The government is also trying to promote private investment in the highways sector.
The government had increased the MoRTH allocation for FY25 by only three per cent. The Finance Minister had allocated about Rs 2.72 lakh crore. A year before this, Rs 2.64 lakh crore was allocated. Officials with knowledge of the matter said that the government wants to award new projects on the new Build-Operate-Transfer (BOT) model. For this, the government has identified 15 important road projects, whose value is Rs 44,000 crore. Under this, a total of 937 kilometers of road will be built.
Market experts say that if Finance Minister Nirmala Sitharaman increases the allocation for MoRTH on February 1, it will impact the stocks of road construction companies. These include leading construction companies like L&T, IRB Infra, Dilip Buildcon, NCC Infra and Afcons Infra. Shares of Afcons Infrastructure have disappointed investors in the last one year. During this period its return has been only 4.85 percent. The performance of L&T shares has also been poor in the last one year. It has given a negative return of 2 percent during this period.
Dilip Buildcon’s shares have risen only 2.99 percent in one year. IRB Infra shares have given about 11 percent returns in one year. The return on shares of NCC Infra has been around 27 percent in the last one year. This means that the performance of shares of most road construction companies has been weak in the last one year. Experts say that there were Lok Sabha elections in the first quarter of this financial year. This had an impact on construction activities. Due to the implementation of the code of conduct during the elections, the government also had to reduce capital expenditure.