The 2025 was a year of reset for the highway sector when the groundwork was laid down for speedier execution in the years to come while taking a small hit in the current financial year on award and construction targets. Another change was the finalisation of the Asset Monetisation Strategy after extensive consultations that will smoothen the process and create opportunities for retail investors to participate in the programme.
Decline in pace of awarding
The total length of highways awarded so far stood at 1410 km, sharply down from 3100 km in April-December of last financial year. The pace of awarding has been coming down for the past two years and this year the decline has been sharper as in April the Ministry of Road Transport and Highways (MoRTH) made it absolutely compulsory for its road building agencies to strictly ensure availability of 90% Right of Way (ROW) before start.
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It has also mandated that forest and wildlife clearances and approved General Arrangement of Drawing (GAD) for Road Under Bridge and Rail Under Bridge stricter scrutiny of projects before awarding.
Tackling Execution Delays
Earlier awarding before completion of preparatory work resulted in delays. Currently 643 Under construction National Highways (NHs) projects with cumulative project cost of about Rs Four lakh crore, which were awarded since the 2015-16 have spilled beyond their original completion schedule as per contract. Of these 79 projects are facing delays of more than three years, 263 projects of delay of 1 to 3 years and 301 projects a delay of more than a year.
According to analysts all clearances before award may slow down the pace of awarding but once awarded the projects would be executed fast. Last financial year 7538 km of highway projects were awarded and this year too this number could be achieved, according to experts
In April-November total length of national highways constructed is about 4073 km. In April-December of last year this figure stood at 5853 km. The capital expenditure by MoRTH stood at Rs 1.74 lakh crore in April-October, up from Rs 1.44 lakh crore in the same period of 2024-25. General elections in 2024 kept the capex low last financial year.
For this year the highway construction target has been set at 10,000 km as against the achievement of 10,660 km in the last financial year. Typically the pace of construction and award picks up in the last quarter of the financial year.
“ICRA expects the road execution to moderate to 9,000-9,500 km (~25-26 km/day) in FY2026, which is lower than FY2025 execution of 10,660 km. The awarding activity is expected to pick-up in H2 FY2026 given the Ministry’s focus on addressing land acquisition issues and environment clearances,” group head and senior vice president at ICRA Ashish Modani said.
In November of 2023 the government decided to stop sanction of new projects under Bharatmala Project and pay attention to greenfield expressways. At present work on 25 greenfield expressways, totalling 10,000 km across the country, at a cost of Rs 6 lakh crore are in progress.
In the third term the government has approved road projects worth Rs 1.97 lakh crore, which also includes rural roads and eight high speed road projects of 936 km.
“Since road construction activity gains momentum after 6-9 months of project awarding, the pick-up in project awarding activity in the coming quarter remains crucial, otherwise the contractors focused on road projects by MoRTH are expected to witness another dull year in FY2027,” Modani added.
The high speed expressways are capital intensive and most of them will be executed by the private sector through Built Operate Transfer (Toll). To make the projects more attractive more changes in the concession agreement are being worked on.
Last financial year 300 km of highways were awarded through BoT (Toll) but this year no projects have been given for development of highways through this mode.
In June the National Highways Authority of India (NHAI released its asset monetisation strategy. The strategy gives clarity to potential investors in the path ahead so that they build long-term strategies around the programme.
Due to the strategy the government has already raised Rs 12357 crore from monetisation of two highway bundles through Toll Operate Transfer (ToT) mode. The bids for ToT bundles 19,20,21 and 22 and will bring in another Rs 8.000-9,000 crore, taking the total to Rs 20,375 crore. In the last quarter two rounds of monetisation through infrastructure trusts will be done. From private InvIT, the national Highways Infra Trust (NHIT) and public InvIT Raajmarg Infra Investment Trust (RIIT) another Rs 15000-16000 crore can be raised. Another Rs 8,000 crore could come through asset based securitisation.
This will easily enable the government to get to the revised monetisation target of Rs 40,000 crore this financial year. Minister of Road Transport and Highways Nitin Gadkari has said that the ministry has highway assets worth Rs 15 lakh crore that can be monetised. The asset monetisation strategy has a clear roadmap on how the programme will be conducted. This ensures that there will be no dearth of funds for future development work on highways but Gadkari has expressed his dismay over the pace of spending due to various bottlenecks.
The changes in the way highway projects are awarded, cabinet approvals for new expressways, removal of all roadblocks in execution and steady increasing funding with robust asset monetisation programme signals a better 2026.