Business News | State Road Capex to Outpace Central Capex in FY27; Construction Pace Slows to 21 Km/day from 36.8 in FY21: CareEdge
Get latest articles and stories on Business at LatestLY. India's road construction pace is expected to slow to around 21 km per day in FY27 from 25 km per day in FY26, as lower highway awards and execution challenges weigh on activity, while state governments are expected to emerge as the key drivers of road sector capital expenditure, according to CareEdge Ratings.
New Delhi [India], September 25 (ANI): India's road construction pace is expected to slow to around 21 km per day in FY27 from 25 km per day in FY26, as lower highway awards and execution challenges weigh on activity, while state governments are expected to emerge as the key drivers of road sector capital expenditure, according to CareEdge Ratings.
CareEdge Ratings said the roads sector has entered an execution-intensive phase after a decade of significant expansion in the country's road network and rising investment. The focus is now shifting from rapid creation of new assets towards execution and completion of projects already in the pipeline.
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The pace of road construction had reached a peak of 36.8 km per day in FY21. It declined to 25 km per day in FY26 and is expected to moderate further to around 21 km per day in FY27, equivalent to approximately 7,750 km during the year.
The moderation comes as national highway awarding activity has declined from a peak of 12,731 km in FY22 to an estimated 7,000 km in FY26. CareEdge said lower awards during FY25-FY26 and continued execution challenges are likely to affect construction activity in FY27.
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At the same time, state governments are expected to play a larger role in road sector investment. CareEdge expects state road capex to outpace central capex in FY27, driven by greater focus on regional and intra-state connectivity.
The shift towards state-led spending comes as national highway award activity moderates and the sector moves towards completing its existing project pipeline.
India's overall road network expanded from about 52.30 lakh km in FY16 to 63.73 lakh km in FY26.
Annual government and private road capex also increased from Rs 0.94 lakh crore in FY16 to Rs 2.62 lakh crore in FY26.
Rajashree Murkute, Senior Director at CareEdge Ratings, said the sector is moving from rapid expansion towards execution quality, operationalisation and asset monetisation.
“The Indian roads sector is transitioning from a phase of rapid expansion to one centred on execution quality, operationalisation and asset monetisation,” Murkute said.
She added that FY27 awarding activity could benefit from the revised BOT-Toll framework and a stronger award pipeline, although construction pace is likely to moderate because of lower award inflows and execution challenges.
The growing pool of operational annuity- and toll-backed assets is providing greater cash-flow visibility and creating opportunities for asset monetisation. However, softer valuation multiples and limited availability of mature toll assets could moderate the pace of monetisation. (ANI)
(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)