The plan is to mobilize another ₹80,000 crore for new construction by monetizing the National Highways Authority of India’s (NHAI) operational assets via toll-operate-transfer (ToT), infrastructure investment trusts (InvIT), and securitization of upcoming assets, added the officials, on the condition of anonymity.
The Centre provided capital expenditure (capex) of ₹2.72 trillion (revised estimates) to the ministry of road transport and highways (MoRTH) in 2024-25, and kept it unchanged in 2025-26. “This may now increase only moderately or be maintained at the same level (again), according to the estimates shared by the MoRTH with the finance ministry,” said the first official.
Meanwhile, the NHAI’s reliance on the budgetary allocation is likely to ease in 2026-27, as the state-owned highway builder is set to float another InvIT—Raajmarg Infra Investment Trust (RIIT) to service its debt. RIIT has received the Securities and Exchange Board of India’s (Sebi) approval, with its first public issuance expected in February.
The NHAI’s first InvIT—National Highways Infra Trust (NHIT)—had mobilized ₹46,000 crore across four fundraising rounds starting in 2020. As the highway builder deploys InvIT proceeds exclusively for debt repayment, its outstanding debt has declined from a peak of ₹3.5 trillion in 2021-22 to ₹2.39 trillion by September 2025.
Private capital
The move also coincides with the government’s efforts to attract private capital inflows back into the highway sector by awarding projects under the build-operate-transfer (BOT) model, following a hiatus since 2014.
“These measures would reduce our dependence on large doses of budgetary funds that have been maintained for the past three to four years. We are expecting that current levels of budgetary support should be maintained for a couple of years before this support could be reduced,” added the first official.
To be sure, together with Indian Railways, these ministries represent more than half of the government’s planned capex in a fiscal year. Mint reported on 19 November that Indian Railways’ capex is expected to rise by about 12% in 2026-27 to roughly ₹2.76 trillion, from ₹2.52 trillion in 2025-26, which would be the highest-ever allocation for the national carrier.
The government takes the final call on budget allocations closer to the budget announcement, considering revenue and economic growth forecasts, as well as savings in revenue spending.
Mint‘s emailed queries to the finance and road ministries, and the NHAI remained unanswered.
Despite a likely flat allocation for the road ministry, highway construction and project awards—especially those executed under the public-private partnership (PPP) mode—are expected to see the same momentum in the coming years.
On 6 January, the finance ministry announced the National Infrastructure Pipeline (NIP) 2.0, comprising 852 infrastructure projects to be developed under the PPP mode, with a combined investment of over ₹17 trillion over three years spanning FY26, FY27 and FY28.
The ministry’s data showed that the road ministry would account for the highest number of projects—108 in total, with an estimated cost of over ₹8.76 trillion.
Experts, however, say the BOT model is a tough sell. “BOT projects are a good idea but have been difficult to implement in the last few years due to a low increase in tolls arising from low WPI (wholesale price index) and increased traffic risks arising from several new expressways and greenfield alignments being set up by both central and state governments,” said Kuljit Singh, partner and national infrastructure leader, consulting major EY India.
“Further, BOT projects do not get the benefit of a mandatory 40% capex grant and hence, require developers to put in at least 2 to 3 times more equity into projects as compared to similar-sized hybrid annuity model (HAM) projects,” Singh added. The HAM is a PPP model in which the private partner is repaid over time through annuity payments, rather than collecting tolls.
The share of BOT projects in highway contract awards has fallen from a high of 90% a decade ago to less than 10% now. Private investors have so far shied away from taking on the entire risk of constructing highways and have instead opted for projects awarded under the HAM and engineering, procurement, and construction (EPC) models.
Between 2016 and 2025, the road ministry awarded about 110,000 kilometres of projects, of which around 90,000 km (81.5%) were under the EPC model, 19,943 km (18.4%) under the HAM model, and just 0.1% under the BOT model, according to ratings agency Icra Ltd.
“Keeping in view the above, as a fallback to no increase in budgetary allocation, the government will have to significantly increase the pace of divestments and also allow the NHAI to enhance its leverage. In the absence of the above, the pace of highway development may not be able to catch up to the rates seen immediately post-covid,” added Singh.
Slowing momentum
The continued slowdown in project awarding over the past two years, combined with the extended monsoon, is expected to impact road execution in 2025-26. Highway construction has declined by 12% to 3,468 km in the first seven months of 2025-26, from 3,920 km in the year-ago period.
Further, if the subdued awarding activity continues, it could pose a downside risk to execution estimates, said Suprio Banerjee, vice president and co-group head, Icra Ltd. “Capital outlay of the MoRTH increased by more than 4.0 times to ₹2.72 trillion in FY26 BE from ₹0.66 trillion in FY16 at a compound annual growth rate of 15%. Although it has remained marginally lower, it is healthy at ₹2.72 trillion and accounts for 24.3% of the overall capital outlay under the Union budget. Going forward, the allocation to the ministry is expected to remain at healthy levels,” Banerjee added.
Icra expects the road awards to stand at 8,500-9,000 km in 2025-26, slightly higher than the estimated 7,500-8,000 km for 2024-25. However, it is likely to remain lower than FY21-FY23. The awarding activity is expected to pick up in H2 FY26, given the ministry’s focus on addressing land acquisition issues and environmental clearances prior to project awarding. Nevertheless, delays in requisite approvals or revisions in the awarding process, if any, pose downside risk to our estimates, Banerjee said.
