Highway project awarding needs revival, Crisil says, as land and approvals slow progress

Crisil said India needs to speed up highway project awarding, as recent awards slowed sharply. The agency linked the slowdown mainly to delays in approvals and a shortage of encumbrance-free land. Crisil said funding conditions remain supportive, helped by government budgets and asset monetisation options.

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The report warned that road developers may face pressure if awards stay weak. Crisil said smaller award volumes can thin order books and limit growth. The agency added that execution stayed stronger than awards, but execution has also eased after an FY24 rise.

Highway awarding slowdown, Crisil flags land and approvals

Crisil reported that road sector awarding crossed 12,000 kilometres in FY23. The pace then fell to below 8,000 km in FY25. Crisil also estimated FY26 awarding at below 8,000 km. The report noted that execution has remained higher than awarding, despite recent easing.

Crisil said the key constraint is not a lack of capital for highways. The report said budgets stayed strong, and monetisation avenues remained available. It again pointed to missing encumbrance-free land and long approval cycles as the main reasons behind fewer project awards.

Around a month earlier, Union Roads Minister Nitin Gadkari raised concern over slow spending on road projects. Nitin Gadkari said higher outlay can also support India’s economic growth. Crisil linked the current award slowdown to developer pipeline risks, rather than financing stress.

Highway awarding outlook, Crisil sees revival with budgets and monetisation

Crisil expected a gradual pickup in highway project awarding after a multi-year slowdown. The agency said this view rests on healthy budget allocations and steps to clear approval bottlenecks. The report said these measures may improve award flow, if land availability improves alongside process reforms.

The report said asset monetisation by the National Highways Authority of India is likely to accelerate. Crisil estimated Rs 70,000-80,000 crore worth of assets may be monetised to support funding. The report treated monetisation as a key tool to finance highway expansion.

Crisil said the Ministry of Road Transport & Highways MoRTH Government of India budget stayed firm. The report cited a 12 per cent compound annual growth rate CAGR between FY21 and FY26. It added that the budget estimate for FY27 stood at 2.9 lakh crore.

Highway awarding and other infrastructure, Crisil tracks smart meters and new-age sectors

On electricity distribution, Crisil said smart meter rollout may face slippages. The report flagged right-of-way constraints and lower-than-expected consumer acceptance. It added that these issues can slow execution timelines, even if broader sector funding and policy backing remain in place.

The report said data centres and smart meters look more bankable among new-age segments. Crisil linked this to more settled business models and stronger track records. It said battery manufacturing and green hydrogen may need policy support, as both remain at an earlier stage.

Crisil projected overall investment growth of 45-50 per cent in key infrastructure over the next two financial years. The report pegged total investment at Rs 23-24 lakh crore, supported by domestic demand and government policy. It said the outlook holds despite West Asia conflict risks and global uncertainty.

Krishnan Sitaraman, chief ratings officer, Crisil Ratings, said that while key infrastructure sectors are largely insulated from the direct impact of the West Asia conflict, they do face indirect inflationary pressure if the conflict prolongs. Crisil said these indirect costs may affect inputs and project economics.

With inputs from PTI