JUNE 2025

National roads and highways are not just pathways between cities. They are the bridges to opportunity, the arteries of commerce, and the routes to dreams.

How India funds them today will decide where they take the nation tomorrow.

It is subject of national interest that not only connects cities and villages, but also connects aspirations, ambitions, and the future of India: The Indian highway infrastructure.

• एनएचएआई (NHAI) : प्रगति का रास्ता या आर्थिक दलदल ? 

With over 1.46 lakh kilometres of national highways crisscrossing the country, India stands immense with the second-largest road network in the world.

But behind this great achievement lies a tangle of challenges, strategic decisions, and critical debates.

The pertinent question today is: Are Indian highways truly driving the country towards development, or is it simply paving over problems that will come back to haunt the taxpayers?

A success story.

Back in 2014, India was building national highways at a speed of just over 11 kilometres per day.

Fast forward to today, and India has surged ahead with construction speeds reaching over 30 kilometres a day.

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...India stands immense with the second-largest road network in the world

Massive expressways like the Delhi-Mumbai Expressway, the Samruddhi Mahamarg (Mumbai – Nagpur Expressway) in Maharashtra, and the ambitious Bharatmala Pariyojana have redefined connectivity.

Villages that once depended on bullock carts now have access to markets, healthcare, and education because of these roads. 

Trucks carry goods faster, reducing fuel consumption and boosting trade.

In fact, the Reserve Bank of India’s 2019 study revealed that infrastructure spending has a multiplier effect of 3.2x on the GDP. 

That means every rupee spent on road infrastructure returns over three rupees to the economy.

This is nothing short of transformational.

However, every achievement carries its own set of challenges. 

The government has changed the highway construction measurement method from road kilometres to lane kilometres, emphasizing expressways and 4-lane roads.

Currently, progress is measured by linear length, treating a single kilometre of both 6-lane and 2-lane roads equally. 

• एनएचएआई (NHAI) : प्रगति का रास्ता या आर्थिक दलदल ?

With India's focus on building more high-speed roads and expressways, this measurement method may no longer accurately reflect real progress.

This method has affected the growth rate of highway construction statistics. 

When compared with the performance of previous governments, it may seem more impressive, although this may not be the actual case. 

It will likely still offer advantages for political promotion.

To understand how India got here, a revisit to highway history is necessary.

Initially, the National Highways Authority of India, (NHAI), followed the Build-Operate-Transfer model, (B-O-T) where private companies would build roads, collect tolls for 20–30 years, and then hand them over to the government. 

NHAI barely had to spend anything.

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... Infrastructure spending has a multiplier effect of 3.2x on the GDP

But by 2014, this model had collapsed.

Why?

Because toll revenues fell short, land acquisition took years, and banks got nervous. Projects were abandoned, and the private sector pulled out.

So, NHAI had no choice but to step in and fund roads itself.

It adopted new models like (Engineering, Procurement, Construction) EPC, where it paid the full construction cost upfront, and (Hybrid Annuity Model) HAM, where it shared part of the risk with private players. 

Under HAM, the government funds 40% of the project cost (like EPC), while private players cover the remaining 60% and are paid back through annuities over time. 

Consequently construction accelerated.

But funding it? That became the real challenge.

While the shift to EPC and HAM spurred construction, it also placed the financial burden squarely on the shoulders of NHAI. 

NHAI began borrowing heavily. Its debt rose from Rs.24,000 crore in 2015 to over Rs.3.35 lakh crore in 2024.

A 14-fold increase in under a decade.

And what’s worse? Since NHAI is an autonomous body, its borrowings are not shown in the central government's fiscal deficit.

• एनएचएआई (NHAI) : प्रगति का रास्ता या आर्थिक दलदल ?

The Comptroller and Auditor General of India (CAG) called this out in 2019.

If you include NHAI and other similar agencies, India’s real fiscal deficit isn’t 3.4% of GDP. It’s closer to 5.8%.

That rang alarm bells in the corridors of power. In 2022, the Finance Ministry put a stop to NHAI’s borrowing binge.

It said from now on, all funding must come via the central budget or from NHAI’s own resources. And that is where India’s grand monetisation strategy begins.

NHAI, sitting on Rs.4 lakh crore worth of highway assets, decided to cash in.

They decided to lease toll rights for 20 years to private players and in return get a lump sum immediately.

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...The Comptroller and Auditor General of India (CAG) called this out in 2019

This gave birth to the T-O-T, or Toll-Operate-Transfer model. Then came InvITs (Infrastructure Investment Trusts) where roads were bundled into investment products and sold to big funds.

Introduced in 2021, this is like a mutual fund for roads. NHAI bundles multiple highways into a trust, sells “units” to investors, and shares toll income with them.

Large institutions like LIC, Adani, Abu Dhabi based investors and foreign pension funds have already invested.

Recently, NHAI launched plans for public InvITs, where even retail investors who can own a tiny piece of India’s roads.

NHAI has already raised over Rs.1.4 lakh crore from monetisation and used part of it to repay loans. Its debt has now come down to Rs.2.4 lakh crore. It’s even saving over Rs.1,200 crore in interest every year.

But here’s the fundamental question: Are we unlocking value, or simply renting the national asset to meet today’s bills?

Monetisation is not income.

It’s an advance. If you lease a road that generates Rs.100 crore annually for 20 years, you give up Rs.2,000 crore in future income to get Rs.1,000 crore today.

That might be necessary in a cash crunch. But it's not sustainable.

Moreover, only certain roads qualify for monetisation.

High-traffic, six-lane toll roads are attractive. But India has limited supply of such roads. The rest are either low-traffic, rural, or tied up in litigation.

In short, monetisation has its limits.

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Monetisation is not income

For example, in 2024, the government plans to monetise 1,472 kilometres of highways and hopes to raise Rs.40,000 crore.

But those roads generated only Rs.1,800 crore in tolls last year.

Can investors really recover their investment and make a profit over 20 years from Rs.1,800 crore a year?

Maybe not.

This leads to another concern.

When you sell tolling rights to private players, who watches them?

What mechanisms are in place to prevent toll manipulation or overcharging by private operators? 

While electronic tolling via FASTag has improved transparency, many toll collection agencies have faced allegations of underreporting revenue.

They are audited, but audits are only as effective as their enforcement. Also, who sets the toll rates?

It’s the National Highways Fee Rules under the Ministry of Road Transport and Highways, which prescribes formula-based revisions annually, often linked to inflation.

• एनएचएआई (NHAI) : प्रगति का रास्ता या आर्थिक दलदल ?

But political interference, delays in revision, or abrupt changes can scare away investors.

And finally, what happens when all prime roads have been monetised?

Where will NHAI get money to build new roads?

Its current budget for 2025–26 is Rs.1.87 lakh crore, but there’s no room for fresh borrowing.

Monetisation can’t go on forever. India will need a fresh strategy. So, what is the way forward?

Firstly, India needs to look at sustainable, long-term models. Perhaps earmark a portion of fuel cess or GST for road building. Or create a dedicated infrastructure fund like in other countries.

Secondly, NHAI must be selective about monetisation. Don’t sell roads just for the sake of it. Use it to fund new construction, not to cover past mistakes.

Third, India must strengthen audit systems. Bring in third-party auditors with real-time monitoring and public disclosure of toll data.

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Where will NHAI get money to build new roads?

Fourth, consider the role of the private sector. They should be partners, not profiteers. It will ensure that value created by public money benefits the public in the long run.

In conclusion, Indian highways are a symbol of national progress. 

They connect, they empower, and they transform. But how India will fund, manage, and monetise them, it  will decide whether this journey ends in prosperity or in potholes.

Let India not mortgage the future to fix the present.

India’s infrastructure story should be built not just on concrete and asphalt, but on sustainability, transparency, and foresight.