₹1 Trillion Worth of National Highway Projects Delayed: Care Ratings

More than half of the 374 national highway projects let out by the National Highways Authority of India (NHAI) with a construction value of ₹1 trillion were over six months behind schedule as of December 2024, a Care Ratings report indicated. The percentage of such delays rose from 33% in June 2023 to 55% as of December 2024, demonstrating a notable improvement in the scenario.

The Hybrid Annuity Model (HAM) is still the most favored method of building national roads, accounting for 55% of all projects. The total bid project costs (BPCs) of these around 16,000-kilometer contracts, let out between 2015 and 2024, stand over ₹4.03 trillion.

As of September 2024, nearly 42% of the projects—worth over ₹1.65 trillion—were completed. At the same time, 45% of the projects, valued at ₹1.80 trillion, were under construction, while the remaining 13% awaited the appointed date to begin the work.

Among the projects under construction, delays have implications for 55% of them, valued at ₹1 trillion. While extensions are granted to compensate for project-specific risks, these delays still retard the overall highway building pace and the profitability of the developers.

The rising competitive pressures in the industry, challenges in procuring land free of encumbrances, and unfavorable weather conditions like heavy rain are the key reasons for the delays. These reasons continue to cause disturbances to the implementation of the projects, resulting in longer timelines and potential cost overruns.

Since the construction of national highways is central to India’s infrastructure growth, increasing delays are equally a concern for developers as they are for politicians and can affect long-term economic growth as much as connectivity improvement.