New Delhi: The Union Government has agreed to release funds for Kerala's National Highway (NH) projects. Union Transport Minister Nitin Gadkari informed the Rajya Sabha that if the GST on construction materials is waived, Kerala will not need to contribute its share towards land acquisition costs.

The minister stated that the Kerala government has already allocated ₹5,000 crore for land acquisition, but Chief Minister Pinarayi Vijayan has conveyed the state’s inability to provide further funds. As a solution, Gadkari suggested that the transport department, which raises funds from the capital market, could manage ₹1 lakh crore or ₹2 lakh crore without difficulty.

It costs approximately ₹95 crore to construct one kilometre of an NH in Kerala. Of this, ₹46 crore accounts for construction expenses, while land acquisition alone costs between ₹46 crore and ₹50 crore per kilometre. Gadkari called on the Kerala government to waive the 18 pc GST on construction materials such as steel and cement, along with the 9 pc royalty imposed on sand and other materials.

CPM MP John Brittas assured the minister that Kerala is ready to cover the cost of land acquisition, provided that these loans are excluded from the state's borrowing limits. He also pledged full cooperation in addressing the issue with the state government.

Government sources clarified that waiving GST would result in financial losses for the state. However, if the loan amount for land acquisition is excluded from borrowing limits, Kerala would face no significant difficulty in securing funds.

Gadkari further pointed out that the high cost of land acquisition in Kerala was already acknowledged during discussions held two years ago. At that time, Chief Minister Vijayan had committed to bearing 50 pc of the land acquisition costs. Although the Kerala government has already invested ₹5,000 crore, it now faces challenges in finding ₹3,600 crore for land acquisition for Ernakulam-Kundannoor bypass.

Given the financial constraints, the Chief Minister has decided not to pay for GST on materials such as steel and cement required for NH construction. Instead, these exemptions will be considered as the state's share of project costs. Gadkari reiterated the Centre’s willingness to bear the entire cost of NH projects, provided Kerala waives royalties for sand and stone.