Govt misses FY26 highway construction target due to delay in land acquisition

National highway construction in FY 2025-26 stood at 9,380 km against a target of 10,000 km — the lowest construction output since FY 2017-18 (when 9,829 km ...

What Happened

National highway construction in FY 2025-26 stood at 9,380 km against a target of 10,000 km — the lowest construction output since FY 2017-18 (when 9,829 km were built).
A Ministry of Road Transport and Highways official confirmed the shortfall was "mainly due to delays in land acquisition and securing other clearances."
This marks a significant decline from 10,660 km constructed in FY 2024-25 and 12,349 km in FY 2023-24 — the latter being India's peak highway construction year.
New highway project awards have also dropped sharply — from 12,376 km in FY 2022-23 to just 7,538 km in FY 2024-25 — indicating a thinning pipeline of future construction work.
NHAI (National Highways Authority of India) separately reported constructing 5,313 km in FY26, exceeding its own institutional target of 4,640 km by 15% — the discrepancy reflects that total national highway construction includes projects executed by State PWDs and other implementing agencies beyond NHAI.

Static Topic Bridges

National Highways Development and NHAI's Mandate

The National Highways Authority of India (NHAI) is a statutory body established under the National Highways Authority of India Act, 1988, responsible for the development, maintenance, and management of National Highways in India. It operates under the Ministry of Road Transport and Highways (MoRTH). Beyond NHAI, highway construction is also executed by the National Highways and Infrastructure Development Corporation (NHIDCL) and State Public Works Departments (PWDs) on behalf of the central government.

India has approximately 1.46 lakh km of National Highways (NH), about 2% of total road network but carrying nearly 40% of road traffic
Government targets over recent years: FY23 — 10,331 km achieved; FY24 — 12,349 km (peak); FY25 — 10,660 km; FY26 — 9,380 km vs 10,000 km target
Bharatmala Pariyojana Phase-I: the flagship highway corridor programme sanctioned at ₹5.35 lakh crore covering ~34,800 km — the primary driver of NHAI's expanded construction programme
Funding mechanisms include: NHAI bonds (tax-free), Toll-Operate-Transfer (TOT) model, Hybrid Annuity Model (HAM), and budgetary support from Union Government

Connection to this news: The miss in FY26 targets reflects systemic constraints in the Bharatmala delivery pipeline — particularly the gap between project awards and on-ground construction readiness due to clearance delays.

Land Acquisition Framework — RFCTLARR Act, 2013

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act, 2013 governs all land acquisition by or for the central and state governments. It replaced the colonial Land Acquisition Act of 1894 and came into force on January 1, 2014. While the Act strengthened landowner and community rights, its elaborate procedural requirements — Social Impact Assessment, Gram Sabha consent in scheduled areas, multi-stage notifications — have substantially increased the time and cost of acquisition for linear infrastructure projects.

Compensation: 4x the market value in rural areas; 2x in urban areas (includes a solatium of 100% over market value)
Social Impact Assessment (SIA): mandatory before acquisition for multi-crop agricultural land; conducted with local body consultation
Timeline: The Act prescribes a minimum 12-month process from notification to award — extendable by litigation and appeals
Consent requirement: 80% of displaced families must consent for PPP projects; 70% for private-sector acquisition
For scheduled (tribal) areas: Gram Sabha consent is constitutionally mandatory under the PESA Act, 1996 read with Fifth Schedule
High compensation rates and mandatory R&R (Rehabilitation and Resettlement) entitlements increase project costs when factored in

Connection to this news: The Ministry's attribution of the construction shortfall to land acquisition delays directly implicates RFCTLARR's procedural complexity as a structural impediment to India's infrastructure delivery capacity.

Highway Construction Models — PPP and HAM

India employs several models for highway project execution, balancing private participation and risk:

EPC (Engineering, Procurement, Construction): Government bears full financial risk; contractor builds for a fixed price. Suitable for financially unviable corridors.
BOT-Toll: Private developer builds, operates, and collects tolls for 20–30 years. Private sector bears traffic risk.
BOT-Annuity: Private developer builds; government pays annuity regardless of traffic. Government bears traffic risk.
HAM (Hybrid Annuity Model): Introduced in 2016; government pays 40% during construction, 60% as annuity during operations. Balances risk between government and developer.
TOT (Toll-Operate-Transfer): NHAI monetises existing completed highways by bundling toll rights and transferring them to private operators for upfront payment.

HAM has been NHAI's dominant model in recent years; reduces developer financing burden while ensuring construction commitment
The declining awards pipeline (7,538 km in FY25 vs. 12,376 km in FY23) suggests either reduced private appetite or government moderation of new commitments due to acquisition readiness concerns
Land must be handed over to contractors (at least 80% in most contract conditions) before construction can begin — land acquisition delay directly delays construction start

Connection to this news: The mismatch between awards and construction reflects the critical sequencing dependency: contracts can be awarded on paper, but construction cannot begin without land — making acquisition delays the single largest execution bottleneck.

Key Facts & Data

FY26 highway construction achieved: 9,380 km (target: 10,000 km)
FY26 construction is the lowest since FY 2017-18 (9,829 km)
Year-on-year comparison: FY25 — 10,660 km; FY24 — 12,349 km (peak); FY23 — 10,331 km
New project awards declined: 12,376 km (FY23) → 7,538 km (FY25)
NHAI separately achieved 5,313 km in FY26, exceeding its own target of 4,640 km by 15%
Bharatmala Pariyojana Phase-I: ~34,800 km approved; sanctioned cost ₹5.35 lakh crore
India's total National Highway network: approximately 1.46 lakh km
NHAI established under: National Highways Authority of India Act, 1988
Land compensation under RFCTLARR: 4x market value (rural), 2x (urban)
RFCTLARR Act in force since: January 1, 2014
Primary cause of shortfall: delays in land acquisition and statutory clearances