The National Highways Authority of India (NHAI) has slashed its debt to just under Rs 2 lakh crore by prepaying loans of over Rs 1.2 lakh crore and repaying another Rs 31,300 crore since March 2022, according to government data cited by Business Today. This aggressive debt reduction follows a peak debt of Rs 3.5 lakh crore in 2021-22, which had raised sustainability concerns.
Debt Reduction Through Asset Monetisation
NHAI's debt reduction is primarily driven by monetisation of completed highway assets. Since 2018-19, the authority has raised Rs 63,911 crore from 3,175 km under the Toll-Operate-Transfer (TOT) model and another Rs 59,588 crore from placing 2,913 km under Infrastructure Investment Trusts (InvIT). These monetisation vehicles have provided assured revenue streams, attracting strong investor interest.
"We have maintained the accelerated pace of highway construction while continuing to focus on asset monetisation. This strategy will continue, and we are hopeful of reducing the debt burden further," an NHAI official said, as quoted by Business Today. "The assets offered by NHAI have assured revenue streams and carry minimal risk for investors."
Shift in Financing Strategy
Since 2022-23, NHAI has been barred from directly borrowing from the market. Instead, the central government includes NHAI's borrowings as part of its own, classifying them as government capex. This has led to a sharp rise in budgetary allocation for the highways sector — from Rs 31,000 crore in 2013-14 to Rs 3.1 lakh crore in the current financial year. The change in financing strategy has reduced NHAI's standalone debt burden while maintaining construction momentum.
Record Monetisation and Future Targets
Asset monetisation hit a record Rs 41,079 crore in FY24, compared to Rs 28,000-29,000 crore in each of the previous two fiscal years. For the current financial year, NHAI has set a target to raise approximately Rs 30,000 crore from monetising national highway projects.
| Metric | Value |
|---|---|
| Debt at peak (2021-22) | Rs 3.5 lakh crore |
| Current debt | Under Rs 2 lakh crore |
| Prepayments since March 2022 | Over Rs 1.2 lakh crore |
| Additional repayments | Rs 31,300 crore |
| Monetisation in FY24 | Rs 41,079 crore |
| Cumulative TOT proceeds (since 2018-19) | Rs 63,911 crore |
| Cumulative InvIT proceeds (since 2018-19) | Rs 59,588 crore |
| Budgetary allocation (current FY) | Rs 3.1 lakh crore |
| Budgetary allocation (2013-14) | Rs 31,000 crore |
Implications for Infrastructure Finance
For finance executives and investors, NHAI's debt reduction demonstrates the viability of asset monetisation as a tool to manage large infrastructure liabilities. The use of TOT and InvIT models provides a template for other state-owned enterprises to unlock capital from operational assets. The strong investor response to NHAI's offerings, driven by assured revenue streams, indicates a healthy appetite for infrastructure debt instruments. Treasury professionals should note the shift in NHAI's funding to on-budget government borrowing, which may affect the supply and pricing of government securities. The continued reduction in NHAI's debt improves the overall credit profile of India's infrastructure sector, potentially lowering the cost of capital for future projects.
Sources:
