NHAI unveils new norms to part finance urban projects

NHAI is working on a mechanism to share gains in land value from upgrading of highways in urban areas as it looks to part-finance urban projects amid increasing costs of land acquisition, said sources. The move will help the authority raise extra budgetary resources for urban highway projects and ring roads. Basically, the central government builds the roads and funds them and the nodal agency is trying to capture the value enhancement, especially in urban projects, so that it would be able to part-finance the projects and meet the viability gap funding. Through value capital financing (VCF), the Centre will partner state governments and development authorities to share betterment levy, land value taxes and development charges. Betterment levy is a tax that a state collects on a plot of land that it has made better by building roads, metros, airport, among others. The appreciation in land value on account of development of highways is generally captured by real estate brokers, who essentially benefit at the cost of taxpayers’ money. With betterment levy, or VCF, the government may get sellers of land around highways to pay cess in tandem with the appreciated value of the land, to be shared between the Centre and the states.