Road building has slowed, but a ₹50,000 cr booster may help
₹50,000 crore into highway building in the current fiscal as it chases a record 13,800-km target, despite slow construction across much of the year. The Union budget for FY24 had granted ₹2.6 trillion for the ministry of road transport and highways (MoRTH) for road construction. The additional amount will be used to build new roads, pay for projects awarded earlier, and acquire land.
“The likely capex (of MoRTH) in 2023-24 and 2024-25 would be ₹3.11 lakh crore and ₹3.31 lakh crore. However, from 2025-26, it will further rise in percentage terms," a ministry spokesperson said in response to a query. Infrastructure development has a high multiplier effect, and the growth is expected to sustain over the medium term, supported by conducive policies, strong investor interest and healthy financial profiles.
Better and faster connectivity also resonates well with voters. To meet the planned expenditure, the ministry aims to raise ₹15,000 crore by monetizing InvITs (infrastructure investment trusts), ₹6,000 crore by securitizing future toll revenue, and ₹16,000 crore from the toll operate transfer (ToT) route, according to MoRTH. The ministry will also seek additional government funds through a supplementary demand.
More than 6,217 km of roads have been built this fiscal up to December 2023, which is just 45% of the target for the full year, leaving a big gap that needs to be filled by the end of March. In FY23, 5,774km of roads were built till December. A road ministry official said construction of over 50km per day is expected in the rest of the fiscal year, which will require more funds; hence the higher capex projections.
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