FY25 budget likely to see moderate increase in allocation for road construction

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₹34,805 crore in FY24. The government expects this number to almost double in FY25. Back of the envelop calculations showed private investments were at ₹20,000 crore in FY23.

As BOT (toll) projects allow private sector bidders to take construction risk and invest in developing road projects, they relieve the pressure on the government to spend more money to keep up the momentum of road and highway construction in the country. “We are expecting 20-25% of highway project awards this year to be on the BoT (toll) model. This would relieve the pressure on the government to spend on its own for such infrastructure development," an official aware of the development told Mint.

“The money will continue to be spent by the government but with more private investors, central capex could go into more critical infrastructure projects and ones that have strategic interest attached to them." In the interim budget for FY25 presented in February this year, the central government had increased the allocation for MoRTH to ₹2.72 lakh crore, from ₹2.64 lakh crore (revised estimates) in FY24. The allocation for FY23 was at ₹2.58 lakh crore. The official quoted earlier said that the full budget for FY25, scheduled to be announced in late July, may further increase the allocation to MoRTH moderately.

Queries sent to MoRTH remained unanswered till press time. The higher allocation is expected to be used by the ministry, both to step up construction of highways, as well as retire the high levels of debt accrued by NHAI that had ballooned to ₹3.5 lakh crore at the end of FY24. The government plans to construct between 12,000 and 13,000 km of national highways in FY25, while awarding contracts for about the same levels so that the pace of highway