Highway construction pace set to be slowest since FY18: Ind-Ra

A SLOWDOWN IN new highway contracts by the Centre in the past two years is expected to bring the construction pace in 2025-26 to the lowest since 2017-18, according to a report.

- FE BUREAU

The awarding activity by central agencies has remained subdued for the past two years and in this financial year the highway construction is expected to drop 10-15% on year to 9,000-9,500 km from 10,660 km in 2024-25,according to India Ratings (Ind-Ra). The construction of national highways this financial year will be lowest since 2017-18, it said.

Awarding activity has remained weak since FY24, with annual awards stagnating at 8,500 km per year, compared to construction activity exceeding 10,500 km,leading to reduced order backlogs. This decline is also driven by a flat capex allocation of ₹2.72 lakh crore for FY26, after just a 3% year-on-year increase in FY25. This is a marked slowdown from a robust 19% compound annual growth rate (CAGR) during FY21-24.

Internal and extra budgetary resources (IEBR) has fallen to negligible levels recently as the National Highways Authority of India (NHAI) focuses on debt reduction, shifting towards budget-supported capex and monetisation.