India’s national highways are entering a new financial era as the National Highways Authority of India (NHAI) steadily transitions from public borrowing to private investment. In a bid to build more roads without straining government finances, NHAI is increasingly monetising its operational road assets, transferring toll rights to private and institutional investors — both foreign and domestic.
This evolving strategy, branded the Monetisation of Public Highway Assets Framework (MoRPH), allows NHAI to unlock capital tied up in completed highways by leasing toll collection rights for up to two decades. In return, the agency secures upfront payments that are used to reduce debt and fund future infrastructure development.
The approach, though not entirely new, has now been institutionalised and scaled up. In the coming quarters, NHAI plans to auction off three Toll-Operate-Transfer (TOT) bundles, issue two tranches under its Infrastructure Investment Trust (InvIT) model, and launch a public InvIT designed for retail investors. The target is ambitious — ₹40,000 crore to be raised in FY26 by monetising nearly 1,500 km of national highways.
The urgency behind this shift lies in NHAI’s financial trajectory over the last decade. Following the collapse of the public-private partnership model by 2014, NHAI took on the burden of road construction directly, opting for EPC (Engineering, Procurement and Construction) and HAM (Hybrid Annuity Model) contracts. While these models accelerated highway development — boosting construction from 11.6 km per day in 2014 to 34 km in 2025 — they came at a steep cost.
By 2024, NHAI’s borrowings had surged to ₹3.35 lakh crore. Although classified as an autonomous body, meaning this debt didn’t reflect in the Union government’s fiscal deficit, the implications were significant. The Comptroller and Auditor General (CAG) warned in 2019 that off-budget liabilities, including those of NHAI, were masking the true size of India’s fiscal deficit.In response, the Finance Ministry stopped fresh NHAI borrowings from 2022 onward. Instead, the highways body was told to rely on budgetary allocations or its own means to fund new construction. Thus, asset monetisation became the go-to strategy.
So far, the strategy appears effective. NHAI has mobilised over ₹1.4 lakh crore through monetisation routes such as TOT, InvITs, and project-level securitisation. In FY25, it used these proceeds to prepay ₹56,000 crore of debt, saving ₹1,200 crore in annual interest and reducing its total debt burden to ₹2.44 lakh crore.The InvIT model in particular has attracted significant capital. In recent tranches, global pension funds and domestic institutions — including the Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan, and India’s EPFO — have invested in NHAI-backed trusts that offer steady returns from toll collections. With NHAI retaining a 15% stake in these InvITs, the model allows for continued participation while unlocking liquidity.
However, the monetisation approach is not without trade-offs. Each time toll rights are sold, NHAI forfeits two decades’ worth of recurring toll revenue in exchange for an immediate payout. While this offers fiscal breathing room in the short term, it could compromise long-term financial stability — especially as monetisable roads are a finite resource.
Moreover, only a small portion of India’s 1.46 lakh km national highway network qualifies for monetisation. High-traffic, six-lane stretches are attractive to investors, but many other segments face legal challenges or lack the toll revenue potential to be viable. Questions have also emerged about the viability of investor returns. The 1,472 km being monetised in FY26 generated just ₹1,800 crore in tolls last year, raising doubts over the sustainability of large upfront valuations.
The bigger concern is strategic. If NHAI continues divesting its best-performing assets without a robust reinvestment roadmap, it risks eroding its long-term financial autonomy. Meanwhile, infrastructure giants — some of whom earlier built these roads — are now acquiring toll rights and launching their own InvITs, creating a private loop of value capture that leans heavily on public groundwork.As monetisation deepens, India must reckon with what comes next. Should toll revenues be routed back to public hands after a fixed tenure? Can a portion of fuel cess or GST be earmarked for infrastructure renewal? Or will the country remain dependent on periodic asset sales to meet its road-building ambitions?
For now, the monetisation strategy is helping NHAI stay solvent and build more roads. But beyond the short-term gains, policymakers must focus on crafting a sustainable infrastructure funding model that does not rely on selling tomorrow’s income to solve today’s debt.
Also Read : India Infra Growth Transforms Ease of Living
