Budget 2026: MoRTH Outlay Hits Rs 3.10 Lakh Crore to Fuel Highway Expansion

The Union Budget 2026-27 has significantly increased the allocation for the Ministry of Road Transport and Highways (MoRTH) to Rs 3.10 lakh crore. This represents a notable rise from the Rs 2.87 lakh crore allocated in the previous year's Budget Estimates. The move underscores the government's continued commitment to infrastructure as a primary driver of economic growth, focusing on the development of national highways, expressways, and greenfield access-controlled corridors.

Strategic Allocation for NHAI and Debt Management

A central feature of this budget is the allocation of Rs 1.87 lakh crore specifically for the National Highways Authority of India (NHAI). This reflects a 10 percent increase compared to the 2025-26 estimates. The government is pursuing a strategy to recapitalize the NHAI balance sheet through higher budgetary support while maintaining a policy of zero market borrowings. This approach aims to reduce the highway developer's debt, which stood at approximately Rs 2.76 lakh crore at the end of the third quarter of FY25.

By providing direct budgetary resources, the government is shifting away from Internal and Extra-Budgetary Resources (IEBR), which includes loans and equity. According to revised estimates, the NHAI is expected to spend no money as IEBR in the coming fiscal year. This fiscal discipline is intended to make the authority more sustainable while continuing its massive construction mandate.

Focus on Road Works and Regional Connectivity

The budget has earmarked Rs 1.22 lakh crore for various road works, including national highway construction, border roads, and last-mile connectivity projects. This is an increase from the Rs 1.16 lakh crore allocated in FY26. These funds will support flagship programs such as the Bharatmala Pariyojana, the Special Accelerated Road Development Programme for the North-East Region (SARDP-NE), and projects in areas affected by Left Wing Extremism (LWE).

Specific regional projects highlighted include the Patna-Purnea expressway and the Buxar-Bhagalpur highway, with an investment of approximately Rs 26,000 crore. Additionally, the government is focusing on high-altitude connectivity, evidenced by the recent inauguration of the 12-km-long Sonamarg Tunnel in Jammu and Kashmir, constructed at a cost of over Rs 2,700 crore.

Asset Monetization and Private Participation

To supplement budgetary allocations, the ministry is aggressively pursuing asset monetization. Till November 2025, MoRTH has cumulatively monetized Rs 1.52 lakh crore through various modes, including Toll-Operate-Transfer (TOT) and Infrastructure Investment Trusts (InvITs). The target for the current fiscal year is to raise an additional Rs 30,000 crore through these mechanisms.

The government is also identifying a Public-Private Partnership (PPP) project pipeline of 13,400 km, with an estimated cost of Rs 8.3 lakh crore to be developed over the next three years. This strategy aims to leverage private capital for large-scale infrastructure while the government focuses on policy and regulatory oversight.

Maintenance and Quality of Existing Assets

As the national highway network matures, the budget places a renewed emphasis on maintenance. An allocation of Rs 5,020 crore has been made through the Central Road and Infrastructure Fund (CRIF) for the maintenance of national highways. This is higher than the previous year's allocation, reflecting the need to improve road quality, safety, and the overall life of the assets. The ministry is also planning state-of-the-art Wayside Amenities (WSAs) at intervals of 40-60 km along national highways to improve user comfort.

Budgetary Comparison for MoRTH

*Estimated based on previous trends.

New Scheme for Construction Equipment

Finance Minister Nirmala Sitharaman announced a new 'Scheme for Enhancement of Construction and Infrastructure Equipment' (CIE). This initiative is designed to strengthen domestic manufacturing of technologically advanced equipment, ranging from tunnel-boring machines for metros to high-altitude road construction machinery. This move is expected to reduce reliance on imports and lower the overall cost of infrastructure projects.

Future Roadmap and High-Speed Corridors

The government has set an ambitious target to award projects worth Rs 10 lakh crore annually starting from FY27. A major part of this plan involves upgrading 25,000 to 30,000 km of existing two-lane highways into four-lane corridors. Furthermore, the government aims to build 17,000 km of high-speed, access-controlled expressways by 2033, expanding the current network fivefold to boost logistics efficiency.

Market Impact

The increased allocation is expected to provide a significant boost to the construction and cement sectors. Companies involved in Engineering, Procurement, and Construction (EPC) and Hybrid Annuity Model (HAM) projects will likely see a robust order pipeline. The focus on domestic manufacturing of construction equipment will benefit industrial machinery players. Additionally, the zero-borrowing strategy for NHAI is viewed positively by credit markets as it reduces the supply of quasi-sovereign bonds, potentially easing pressure on yields.

Analysis Section

The Budget 2026-27 reflects a transition in India's infrastructure strategy from rapid expansion to a more balanced approach of expansion, maintenance, and fiscal consolidation. By prioritizing the recapitalization of NHAI, the government is addressing long-term debt concerns that have previously shadowed the sector. The emphasis on high-speed corridors and multimodal logistics parks aligns with the broader goal of reducing logistics costs from the current 13-14% of GDP to more competitive global levels. The integration of PM GatiShakti for project planning further suggests a move toward data-driven and coordinated infrastructure development.

Conclusion

The allocation of Rs 3.10 lakh crore for MoRTH in Budget 2026-27 reinforces the road sector's role as a cornerstone of India's capital expenditure strategy. With a clear focus on debt reduction for NHAI, asset monetization, and the adoption of advanced construction technology, the government is laying the groundwork for a more efficient and sustainable transport network. The shift toward 4-laning existing highways and expanding the expressway network will be critical in supporting India's growing commercial vehicle traffic and economic aspirations.