The cess on fuel has been levied since 2000-01 under the Central Road Fund Act, 2000, according to which 50 per cent of the cess on High Speed Diesel (HSD) and all the money from the cess on petrol was to be spent on development and maintenance of National Highways, construction of railway over- or under-bridges and for development and maintenance of roads other than national highways or roads of economic importance. While the cess started as Rs 1 per litre on petrol and HSD oil in 2000-01, in 2003, it was increased to Rs 1.50 per litre and in 2005, it was raised by another 0.50 paise for the development of highways.

Figures compiled by the Ministry of Shipping, Road Transport & Highways show that against a Rs 3,796 crore grant from 2004-05 to 2006-07, states utilised Rs 3,333 crore. The amount that each state left unused ranged from 28 per cent to 3 per cent. The figures—part of the ministry’s tally of underutilised allocations in the last three years-recently drew the attention of the parliamentary standing committee. The committee expressed its unhappiness over the fact that the fund—raised from the cess that citizens paid on petrol and diesel—was not being well utilised.

Union territories fared no better. Against a grant of Rs 150 lakh from the Central Road fund to these governments, they used merely Rs 56.5 lakh between 2004-05 and 2006-07. Officials say the overall trends show that southern states made better use of the fund than their northern counterparts.

“While the utilisation was very bad earlier, it was slightly better now. A state like Delhi did not spend anything from its grant of over Rs 65 crore in two successive fiscals, 2004-05 and 2005-06. Even in 2006-07, it only spent Rs 22 crore of its grant of Rs 43.84 crore. Similarly Pondicherry did not spend anything in 2005-06 and 2006-07,” said a senior official from the Ministry.

Of the Rs 416 crore given to states for roads of inter-state connectivity and economic importance, only Rs 193 crore was used. “The underutilisation is largely due to slow progress of works, receipt of less proposals from states and also states failing to submit utilisation certificates of previous releases. The fund, however, is non-lapsable. The estimate is that over Rs 2,300 crore of CRF is actually lying unutilised because states are not taking a pro-active stand on the issue,” said the official.