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The National Highways Authority of India (NHAI) has reduced its outstanding debt by 43 per cent over the past three years, even as highway project awards dropped to a seven-year low in FY26. NHAI’s debt declined to around INR 1.8 lakh crore from a peak of INR 3.35 lakh crore, while project awards fell amid tighter land acquisition and statutory clearance norms. The agency is prioritising financial discipline alongside economically viable highway development.
The National Highways Authority of India (NHAI) has reduced its outstanding debt by approximately 43 per cent over the past three financial years, bringing borrowings down from a peak of around INR 3.35 lakh crore to about INR 1.8 lakh crore. The reduction comes as the authority adopts a more conservative project awarding strategy, with new highway awards in FY26 declining to their lowest level in seven years.
The fall in debt has been driven by higher toll collections, road asset monetisation through Infrastructure Investment Trusts (InvITs) and Toll-Operate-Transfer (TOT) bundles, and restrained fresh borrowing. According to industry assessments, the authority has shifted its focus towards strengthening its balance sheet while ensuring that new projects are awarded only after meeting key execution requirements.
During FY26, NHAI awarded contracts covering about 3,124 km of highways, substantially below earlier annual levels and below its internal target of around 4,500 km. The value of these awards stood at approximately INR 42,300 crore. The slowdown reflects stricter project appraisal norms, delays in statutory approvals and reduced participation from private developers in Build-Operate-Transfer (BOT) projects.
Road construction also moderated during the financial year, although NHAI completed 5,313 km of national highways, exceeding its internal construction target of around 5,000 km. Across all agencies, national highway construction remained below 10,000 km during FY26, while total project awards across the sector fell to roughly 7,000 km, marking the weakest performance in seven years.
Officials have attributed the lower pace of project awards to a deliberate policy of ensuring that land acquisition, forest and environmental clearances, and utility shifting are substantially completed before tenders are floated. The approach is intended to reduce execution delays, minimise cost escalations and improve project delivery timelines. The government has also shifted its emphasis towards economic corridors and access-controlled expressways instead of incremental highway expansion.
Industry observers noted that the smaller project pipeline has intensified competition among engineering, procurement and construction (EPC) contractors, with bidders quoting significantly below estimated project costs to secure available work. Developers have also diversified into sectors such as railways, renewable energy, mining and power transmission to offset slower order inflows from the highway segment.
While the reduction in debt strengthens NHAI's financial position, analysts indicated that the subdued pace of project awards could weigh on infrastructure order books over the medium term unless approvals accelerate and a larger pipeline of financially viable projects enters the market.
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