Central Road Fund

The Central Road Fund (CRF) is a dedicated non-lapsable fund established by the Government of India to finance the development and maintenance of the country’s road infrastructure. It is a key mechanism for mobilising resources to improve the national, state, and rural road networks, thereby enhancing connectivity, trade, and regional development. The fund plays a pivotal role in implementing major infrastructure programmes such as the National Highways Development Project (NHDP), Pradhan Mantri Gram Sadak Yojana (PMGSY), and various state road projects.

Historical Background

The Central Road Fund was originally created through the Central Road Fund Act, 2000, which came into effect on 1 November 2000. The Act institutionalised a long-term funding mechanism to ensure sustained investment in the road sector.
However, the concept of a road fund dates back to 1929, when a similar fund was established during the British period to finance road construction from fuel tax revenues. The modern CRF was restructured in 2000 to align with India’s growing infrastructure requirements, with specific allocations for national and state-level road development.
In 2018, the fund was further modified and renamed as the Central Road and Infrastructure Fund (CRIF) under the Finance Act, 2018, expanding its scope beyond roads to include other infrastructure sectors such as railways, ports, and energy.

Objectives of the Central Road Fund

The main objectives of the CRF are:

• To provide a dedicated and sustainable source of finance for road construction and maintenance.
• To ensure balanced development of road infrastructure across national, state, and rural networks.
• To improve road safety, efficiency, and connectivity between urban and rural areas.
• To facilitate economic growth and regional integration through better transportation.
• To promote the modernisation of road technology and maintenance practices.

Sources of Revenue

The Central Road Fund is primarily financed through a cess (tax) imposed on the consumption of petroleum products such as petrol and diesel. This road and infrastructure cess is collected by the Central Government and transferred to the fund.
Key sources include:

• Road and Infrastructure Cess: A specific excise duty levied on petrol and diesel.
• Interest and Returns: Earnings from fund investments.
• Other Appropriations: Grants or additional allocations made through the Union Budget.

The revenue collected is earmarked exclusively for infrastructure development and cannot be used for other general expenditures.

Allocation and Utilisation

Funds from the CRF are allocated annually based on a formula approved by the Ministry of Finance, in consultation with the Ministry of Road Transport and Highways (MoRTH) and other relevant ministries.
The broad pattern of allocation includes:

• National Highways: Approximately 40% of the total fund is allocated to the development and maintenance of National Highways.
• State Roads: About 30% is allocated for the development of state roads, including projects connecting rural and remote regions.
• Rural Roads (PMGSY): A portion is earmarked for rural connectivity under the Pradhan Mantri Gram Sadak Yojana.
• Railway Over/Under Bridges: Funds are allocated for the construction of overbridges and underpasses at railway crossings to enhance safety.
• Road Safety and Research: A smaller share is utilised for road safety programmes, training, and technological development.

After its transformation into the Central Road and Infrastructure Fund (CRIF) in 2018, allocations were broadened to cover other sectors such as:

• Railways and Urban Transport
• Ports, Shipping, and Inland Waterways
• Airports and Civil Aviation
• Power and Renewable Energy Projects

Institutional Framework

The administration of the CRF is governed by a multi-tier framework:

• Ministry of Road Transport and Highways (MoRTH): Nodal agency responsible for overall management and policy formulation.
• Ministry of Finance: Oversees the collection of cess and transfer of funds to various sectors.
• State Public Works Departments (PWDs): Implement projects funded through CRF allocations.
• Parliamentary Oversight: Annual reports and utilisation statements are submitted to Parliament to ensure transparency and accountability.

Importance and Impact

The Central Road Fund has significantly contributed to the expansion and modernisation of India’s road network, which is among the largest in the world. Its impact can be summarised as follows:

• Infrastructure Growth: Enabled the construction and maintenance of thousands of kilometres of national and state highways.
• Rural Connectivity: Strengthened last-mile connectivity and improved access to markets, healthcare, and education in rural areas.
• Economic Development: Reduced transportation costs and travel time, promoting trade, industry, and tourism.
• Employment Generation: Created large-scale employment opportunities in the construction and allied sectors.
• Enhanced Road Safety: Supported the building of overpasses, underpasses, and better road signage systems to reduce accidents.

Challenges and Issues

Despite its success, the fund has faced several challenges:

• Delayed Fund Transfer: Instances of delays in transferring cess collections to the respective ministries or states.
• Underutilisation: Some states have been unable to fully utilise allocated funds due to administrative bottlenecks.
• Maintenance Neglect: Focus has often been more on construction rather than maintenance of existing roads.
• Diversion of Funds: Occasional diversion of resources for non-road purposes before 2018 reforms.
• Environmental Concerns: Large-scale road construction has raised issues related to deforestation and ecological balance.

Reforms and Recent Developments

To address these challenges and expand the scope of infrastructure financing, the government undertook major reforms:

• Transformation to CRIF (2018): The Central Road Fund was restructured as the Central Road and Infrastructure Fund to support broader infrastructure development.
• Enhanced Transparency: Online monitoring systems for fund utilisation have been introduced.
• Public–Private Partnerships (PPP): Greater involvement of private players in road construction and toll operations under the National Highways Authority of India (NHAI).
• Integration with the National Infrastructure Pipeline (NIP): CRIF is now aligned with national priorities for integrated infrastructure growth.
• Green and Sustainable Roads: New projects emphasise eco-friendly construction practices, use of recycled materials, and renewable energy.

Significance in National Development

The Central Road Fund represents a cornerstone of India’s transport and infrastructure policy, supporting the creation of a seamless, efficient, and inclusive transport network. It has strengthened the government’s ability to implement long-term projects without relying entirely on annual budgetary allocations.
By improving connectivity across rural and urban regions, the fund has contributed to balanced regional development, economic competitiveness, and social integration. It continues to be an essential instrument for achieving the vision of “Atmanirbhar Bharat” (Self-Reliant India) through infrastructure-led growth.