News Brief
Slow Highway Project Awards To Impact Construction Pace In FY2026 As Well, Says ICRA
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The sluggish pace of highway project awards over the past two years is expected to further slow down highway construction in the upcoming financial year, according to a report by rating agency ICRA, Financial Express reported.
Due to the impact of elections and an extended monsoon, the government had already revised its highway construction target downward by 15 per cent for FY2024-25, setting it at 10,412 km.
However, ICRA now projects that road execution under the Ministry of Road Transport and Highways (MoRTH) will decline by 5 per cent in FY2026, falling to 9,500-10,000 km from the estimated 10,000-10,500 km in FY2025.
The award of new highway projects between April and December 2024 remained subdued at 3,100 km, the same level as last year and significantly lower than the 5,835 km awarded in the same period in 2023.
ICRA forecasts that road awards will be in the range of 8,500-9,000 km in FY2025, similar to FY2024 levels.
ICRA’s sector head of corporate ratings, Vinay Kumar G, noted: “However, given the increasing focus on building expressways/high-speed corridors, the road construction growth in terms of lane-km expansion will be relatively better. With road awarding expected to improve only in FY2026, the revenue growth of road developers is likely to remain subdued over the next 12-15 months, as it takes 6-9 months from project awarding to on-ground execution.”
The National Highways Authority of India (NHAI) has raised Rs 8,353 crore through the monetisation of highways via the Toll Operate Transfer (ToT) model.
Additionally, it plans to generate Rs 21,000 crore from the Highway Infrastructure Trust and Rs 10,000 crore from securitising stretches of the Delhi-Mumbai Expressway.
ICRA also projects toll collection growth of 7-9 per cent, though traffic growth may slow to 2-3.5 per cent in FY2025 due to moderation in construction, manufacturing, and mining GVA. Toll rates are expected to rise by 3.5-4.2 per cent in FY2026.
