NH Construction in FY26 to Be Lowest in Eight Years

Chennai: National Highways construction in FY26 is expected to fall below 10,000 km, the lowest level since FY18 due to flat capex allocation by the Centre and lesser focus on the Bharatmala project.

National highways construction of 9,000-9,500km in FY26, will be down 10-15 per cent from 10,660 km in FY25 and 12,349 km in FY24, finds India Ratings. According to ICRA, road execution by the Centre has already witnessed a decline of 12 per cent to 3,468 km during the first seven months of FY2026 compared to 3,920 km in the same period of FY2025.

This decline is driven by a flat capex allocation of Rs 2.72 lakh crore for FY26, after just a 3 per cent increase in FY25. This is a marked slowdown from a robust 19 per cent CAGR during FY21–FY24. Further, National Highway Authority of India is focusing on debt reduction and shifting towards budget-supported capex and monetisation.

Awarding activity has remained weak since FY24, with annual awards stagnating at 8,500km per year. The Ministry of Road Transport and Highway (MoRTH) and NHAI have been shifting focus from the Bharatmala project to corridor-based development and more access-controlled highways and expressways, planning 11,000km by FY27 and15,000km by FY32.

ICRA expects the awarding activity to pick up in H2 FY2026, given the Ministry’s focus on addressing land acquisition issues and environment clearances. There has been some activity resumption with NHAI disclosing clearance status for projects worth Rs 1.15 lakh crore where bids have been invited, finds Ind-Ra.

The NHAI has raised Rs 12,357 crore via Toll- Operate- Transfer monetisation during the first nine months of FY2026. Monetisation of a portion of the existing identified assets and assets identified in FY2026, along with five TOT bundles announced, could potentially garner monetisation proceeds of Rs. 35,000-40,000 crore in FY2026.