NHAI Highway Capital Expenditure Growth

In the financial year 2024-25, the National Highways Authority of India (NHAI) reported increase in highway construction. The total length of highways constructed rose by 9 per cent, reaching 5,614 kilometres. This growth occurred despite challenges such as the Lok Sabha elections and a general slowdown in project awards over the past two years.

Record Capital Expenditure

NHAI’s capital expenditure for FY25 surpassed ₹2.5 trillion, marking the highest amount ever recorded in a financial year. This figure exceeded the target of ₹2.4 trillion. The increase of 21 per cent from the previous year reflects NHAI’s commitment to enhancing national highway infrastructure.

Sources of Capital Expenditure

The capital expenditure comprises both government budgetary support and NHAI’s own financial resources. The Ministry of Road Transport and Highways has contributed , accounting for roughly a quarter of the total capital expenditure by the central government.

Concerns Over Slowdown

Experts have expressed concerns regarding the decline in capital expenditure due to the slowdown in project awards since 2023. This slowdown could impact future infrastructure development and the achievement of ambitious targets set by the government.

Monetisation Strategies

In FY25, NHAI employed three primary modes for monetisation of its assets – toll operate transfer (TOT), infrastructure investment trust (InvIT), and toll securitisation. The total monetisation for the year reached ₹28,724 crore. Notably, NHAI achieved its highest-ever single round InvIT receipt of ₹17,738 crore.

Future Targets

Looking forward, the Ministry of Road Transport and Highways aims to meet a ₹10 trillion monetisation target by 2030. This ambitious goal puts stress on the importance of continued investment in highway infrastructure and the need for effective monetisation strategies.

Impact on National Infrastructure

The increase in highway construction and capital expenditure is crucial for improving national infrastructure. Enhanced highways can lead to better connectivity, economic growth, and overall development in various regions across India.

Challenges Ahead

Despite the positive growth in highway construction, challenges remain. The ongoing slowdown in project awards could hinder future progress. Efficient management and innovative financing will be essential to sustain this momentum.

Questions for UPSC:

1. Critically analyse the role of the National Highways Authority of India in enhancing national infrastructure.
2. What are the implications of the recent increase in capital expenditure by NHAI on India’s economic growth?
3. Explain the significance of monetisation strategies employed by NHAI in the context of infrastructure development.
4. Comment on the challenges faced by the Ministry of Road Transport and Highways in achieving its monetisation targets by 2030.

Answer Hints:

1. Critically analyse the role of the National Highways Authority of India in enhancing national infrastructure.

1. NHAI is responsible for the development and maintenance of national highways, crucial for connectivity.
2. It plays a very important role in implementing government policies aimed at improving transportation infrastructure.
3. NHAI’s projects contribute to regional economic development by facilitating trade and mobility.
4. Through increased construction and investment, NHAI addresses infrastructure deficits and enhances road safety.
5. It also engages in innovative financing and monetisation strategies to sustain long-term infrastructure projects.

2. What are the implications of the recent increase in capital expenditure by NHAI on India’s economic growth?

1. Increased capital expenditure indicates a strong commitment to infrastructure development, which is vital for economic growth.
2. Enhanced highway infrastructure can lead to improved logistics and reduced transportation costs for businesses.
3. Investment in highways creates jobs, stimulating local economies and contributing to overall employment rates.
4. Better connectivity can attract foreign investment, boosting economic activity and development in various sectors.
5. It also supports government initiatives aimed at enhancing trade and commerce across states.

3. Explain the significance of monetisation strategies employed by NHAI in the context of infrastructure development.

1. Monetisation strategies like TOT and InvIT provide NHAI with necessary funds for ongoing and future projects.
2. These strategies allow for the efficient use of existing assets while generating revenue for further infrastructure development.
3. They help in reducing reliance on government funding, promoting financial sustainability.
4. Successful monetisation can enhance investor confidence and attract private sector participation in infrastructure projects.
5. Monetisation contributes to achieving long-term funding goals, supporting ambitious infrastructure targets set by the government.

4. Comment on the challenges faced by the Ministry of Road Transport and Highways in achieving its monetisation targets by 2030.

1. Slowdown in project awards since 2023 poses challenge to achieving monetisation targets.
2. Regulatory hurdles and bureaucratic delays can impede timely execution of infrastructure projects.
3. Market conditions and investor sentiment can affect the success of monetisation efforts.
4. There is a need for innovative financing mechanisms to attract investment in a competitive environment.
5. Ensuring transparency and accountability in monetisation processes is essential to maintain public trust and support.