India’s highways construction slows, but govt aims for a final push

The highways ministry, however, is expected to pick up pace in the remaining two months of this financial year and may even seek more funds than budgeted, a government official said.

Construction of highways fell 5.8% to 5,853 km in April-December from 6,216 km of infrastructure created in the first nine months of 2023-24, show data from the ministry of road transport and highways (MoRTH).

Government awards for the construction of new highways also slowed, to 3,100 km between April and December, as against 3,111 km over the corresponding year-earlier period, which itself was a disappointing pace.

The government normally awards over 12,000 km of highway construction in a year.

The highways ministry had said in June that projects couldn’t be awarded in April and May due to the model code of conduct ahead of the national election, which bars governments from announcing projects that could influence voters. However, even after the formation of a new government in May, highways construction in India has remained slow this financial year.

“The construction and award activities this year has been slow largely on account of the nature of projects proposed to be undertaken by highway builder NHAI (National Highways Authority of India),” said the government official cited above, speaking on condition of anonymity.

“We are building more complex projects in FY25 with higher lane configuration and access-controlled network, which brings down linear construction kilometres of highways,” the official added. “But actually, more lane kilometres have been added. Also, the focus is now on maintaining all highways so that mobility remains smooth.”

The highways ministry didn’t immediately reply to Mint’s queries.

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The final stretch

While construction and awards of highways have been slow this financial year, the highways ministry has kept pace in terms of capital spending, chiefly to ensure that more projects get off the ground so they can be completed in the final quarter of the fiscal year (January-March).

The highways ministry incurred capital expenditure of about ₹2,25,060 crore in April-December, accounting for 82.67% of its budgetary capex allocation of ₹2,72,241 crore for FY25.

With a pick-up in infrastructure activities expected in the final quarter of this fiscal year, the ministry is on course to spend its entire budgetary allocation, said the unnamed official cited above. The ministry may even seek more funds for FY25 at the revised estimate stage with construction activity expected to pick up pace in the next two months, the official said.

“The pace of construction has been slower than planned,” said Srishti Ahuja, Investment Banking Partner (Infra), EY India. “While there were a variety of unique factors this year (such as the election model code of conduct) that led to this, given that most new national highways are greenfield alignments, construction will continue to be lumpy for such projects.”

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In 2023-24, too, India’s construction of highways had been slow in the first nine months, at 6,216 km. But the highways ministry ended the financial year with 12,349 km of highways constructed—its second highest level, behind the 13,327 km constructed during the covid year of 2020-21.

The ministry had also used up the entire capex provided by Budget FY24. That was the first time the capital expenditure touched 99.93% of the revised capex provided in the Budget, of ₹2,64,526 crore.

The highways ministry’s capital expenditure, in fact, was above 98% in three of the previous five financial years—the two down years were FY20, when capex was at 91%, and FY22, when capex hit 93%.

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