Budget 2026 May Put Roads Monetisation At Centre Stage, Experts Call for Concession Deal Overhaul

The Ministry of Road Transport and Highways is reportedly expected to see a flat allocation in the Union Budget 2026 as the government aims to attract more private investment in the sector. The move comes at a time when awards of new construction projects have slowed down.

According to a new report by Mint, the Centre is likely to keep the road transport ministry’s allocation in the Union Budget 2026–27 close to ₹2.72 lakh crore, as it looks to shift the focus towards attracting greater private investment. In 2024–25, the government provided capital expenditure of ₹2.72 lakh crore (revised estimates) to the Ministry of Road Transport and Highways (MoRTH).

According to estimates shared by the ministry with the finance ministry, the allocation in FY27 may see only a modest increase or remain unchanged, claimed the report, citing officials.

To support new road construction, the government plans to mobilise an additional ₹80,000 crore by monetising operational assets of the National Highways Authority of India (NHAI). This will be done through instruments such as toll-operate-transfer (ToT), infrastructure investment trusts (InvITs), and the securitisation of upcoming highway assets.

A report by Deloitte agrees with this approach. In a pre-Budget note, it is pushing for higher participation in the roads sector under the BOT model.

But the big four consulting firm urges that the government needs to “re-look at concession agreement structures and risk-reward sharing structures to improve private participation.”

“The government should look at existing concession agreements and, with appropriate consultation, devise a set of concession agreements that will boost private sector participation in these sectors,” Deloitte said.

Adding that it can lead to incremental investment in the current allocations of ₹2.87 lakh crore in the roads space, and ₹2.55 lakh crore in the railways space.

“This will result in a faster build-out of the sectors and create demand for labour, underlying goods and services that will have a multiplier effect on GDP growth. Moreover, encouraging private sector participation can help expand execution capacity, enabling faster project delivery. This becomes important as government-led execution alone may face resource constraints that could slow down the pace of infrastructure development,” it added.

According to the Mint report, the NHAI’s dependence on budgetary support is expected to ease in the financial year 2026–27 (FY27), with the highway authority planning to launch another infrastructure investment trust, Raajmarg Infra Investment Trust (RIIT), to help service its debt. RIIT has received Sebi approval and its first public issue is likely in February.

NHAI’s first InvIT, National Highways Infra Trust (NHIT), has raised ₹46,000 crore across four rounds since 2020. As InvIT proceeds are used solely for debt repayment, NHAI’s outstanding debt has fallen from ₹3.5 lakh crore in 2021–22 to ₹2.39 lakh crore by September 2025.

The move aligns with the government’s push to revive private investment in highways by awarding projects under the build-operate-transfer (BOT) model, which had been largely on hold since 2014.

Officials told the publication that these steps would reduce the need for heavy budgetary support, which has been sustained over the past three to four years. Current levels of funding are expected to continue for a couple of years before being scaled back.

Together with Indian Railways, the roads ministry accounts for more than half of the government’s annual capital expenditure. Final budget allocations are decided closer to the Budget announcement, factoring in revenue projections, economic growth forecasts and potential savings in revenue expenditure.