Union Budget 2026: Pre-Budget Expectations for Highways, Roads and Mobility in India

India’s highways and mobility infrastructure remain a critical growth engine for logistics efficiency, urbanisation, and economic competitiveness. As expectations build around the Union Budget 2026, the focus must shift from only announcing new projects to delivering quality, completion, and long-term value across highways and road infrastructure.

This article outlines the key pre-budget expectations for highways, roads, and mobility, with an emphasis on capital efficiency, maintenance, procurement reform, and infrastructure financing.

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Higher Capital Expenditure for Highways and Roads in Budget 2026

The government should continue its strong capital expenditure push in the highways and mobility sector.

• Maintain capex outlay of approximately INR 2.8 lakh crore in FY26, with a higher allocation for road infrastructure.
• Ensure efficient deployment of capital to avoid project delays and cost overruns.
• Prioritise projects that deliver immediate logistics and travel-time benefits.

Sustained capex remains essential to support freight movement, regional connectivity, and economic expansion.

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Shift from Project Funding to Infrastructure Capability Building

Budget 2026 should move beyond funding physical assets to building execution capacity across the road construction ecosystem.

Key focus areas include:

• Training programmes linked directly to highway and road projects.
• Fiscal incentives for mechanisation and adoption of modern construction technologies.
• Encouraging shared infrastructure models such as equipment pooling and leasing organisations.
• Structured skilling initiatives for operations and maintenance (O&M) professionals.

Capability building improves execution quality, productivity, and project durability over time.

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Increasing Focus on Opex and Lifecycle Cost Management

India’s road infrastructure has historically prioritised asset creation over maintenance, leading to the “build–neglect–rebuild” cycle.

Pre-budget expectations include:

• A clear target to increase opex share to 20–25% of total highway outlay by 2030.
• Ring-fencing maintenance budgets for critical highway corridors.
• Expanding performance-based O&M contracts.
• Incentivising states and concessionaires to invest in long-term asset upkeep rather than short-term fixes.

Lifecycle-focused spending ensures safer roads, lower long-term costs, and better user experience.

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Reorienting Bharatmala Towards Faster Project Completion

Bharatmala must evolve from an announcement-driven programme to a completion-led execution framework.

Policy priorities should include:

• Measuring success by projects commissioned and corridors fully operational.
• Accelerating completion of stalled and unfinished highway projects.
• Unlocking toll revenues and asset monetisation sooner through faster commissioning.

Completing existing projects delivers immediate economic, logistics, and fiscal benefits.

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Procurement Reforms to Improve Quality and Value

The current L1 (lowest-cost) procurement approach often prioritises price over performance.

Budget 2026 should initiate procurement reform by:

• Shifting from input-based specifications to outcome-based performance metrics.
• Evaluating bids on overall value, lifecycle cost, and design innovation.
• Rewarding sustainability, quality, and effective risk-sharing.
• Encouraging innovation in construction methods and materials.

Outcome-based procurement improves durability, efficiency, and accountability.

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Unlocking Infrastructure Financing Beyond Traditional Banks

Infrastructure financing in India remains heavily dependent on domestic banks, which face exposure limits and risk constraints.

The budget should enable a broader financing ecosystem by:

• Expanding guarantee and insurance instruments to de-risk highway projects.
• Facilitating cost-effective currency hedging solutions for foreign investors.
• Encouraging credit enhancement mechanisms to strengthen infrastructure bond markets.
• Attracting long-term domestic and international institutional capital.

Rather than acting as a direct lender, the government should catalyse private capital through market-based instruments.

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Smarter Risk Sharing to Attract Long-Term Capital

Effective infrastructure development requires intelligent risk allocation, not risk dumping.

Pre-budget reforms should focus on:

• Sharing demand and execution risks more equitably between government, developers, and lenders.
• Using credit enhancements and guarantees to improve project bankability.
• Creating predictable, investable frameworks that crowd in global capital.

Smarter risk sharing will deepen India’s infrastructure financing markets and accelerate sustainable growth.

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Conclusion: Budget 2026 Must Prioritise Quality, Completion, and Capital Efficiency

For highways, roads, and mobility, Union Budget 2026 must go beyond headline capex numbers.

The real impact will come from:

• Completing projects faster.
• Investing in maintenance and lifecycle costs.
• Reforming procurement and financing structures.
• Building long-term institutional and execution capability.

A quality-first, completion-driven approach will deliver lasting economic and mobility gains for India.