Earlier this month, the Atal Setu, or the Mumbai Trans Harbour Link, connecting Mumbai to Navi Mumbai, was inaugurated. For a 22-km journey, users will be charged a toll of ₹250 one way. The concept of pay-and-ride on Indian roads has been on the rise. The bulk of India’s road toll revenues come from national highways, rising from ₹17,759 crore in 2015-16 to ₹48,028 crore in 2022-23. According to union minister for road transport Nitin Gadkari, the government is targeting revenues of ₹1.3 trillion by 2030, reflecting an average annual growth of 15%.
Since 2013-14, the total length of national highways has risen around 1.5 times to 145,000 km. However, the last few years have seen the length of highways subject to tolls double. Further, the number of toll plazas on national highways has risen more than five times between 2014-15 and 2021-22, now totalling 959, as per information available on the National Highways Authority of India (NHAI) website.
Under the government’s National Monetization Pipeline to monetize public assets, around ₹6 trillion of revenue was expected between 2021-22 and 2024-25. Of this, the roads sector is expected to be the biggest contributor, at 27%, according to NITI Aayog. Approximately 26,700 km of road assets are set to be monetized, focusing on highways with four or more lanes, excluding certain sections operated by the private sector. This suggests continued sharp increases in both the extent of tolled highways and the number of toll plazas.
Falling averages
But not all highways are equally lucrative. As the government increases the number of toll plazas and the length of highways being tolled, by design, it ends up adding sections that are less remunerative. Thus, the average toll revenue per plaza has declined from ₹116 crore in 2015-16 to ₹46 crore in 2021-22. Seen another way, the average revenue per tolled kilometre has declined from ₹94 lakh to ₹88 lakh over this period.
NITI Aayog, in the section in its report where it assesses the potential of road projects for future monetization, says: “The average realisation by NHAI under past TOT [toll-operate-transfer] concessions successfully awarded has been in the range of ₹9-14 crore per km. A lower range at ₹6 crore per km has been assumed to assess indicative monetization value to factor in certain lower traffic stretches in the portfolio and impact of scale on monetization.”
Long tail
But even average revenues provide only a partial picture. There is a top concentration in toll usage. In 2022-23, just 16 toll plazas accounted for over 10% of revenues. Four of these toll plazas were in Gujarat and three in Rajasthan. The L&T Vadodara plaza in Gujarat and the Shahjahanpur toll plaza in Rajasthan alone accounted for almost 2% of total highway toll revenues in 2022-23. Together, the top 100 toll plazas in 2022-23 accounted for close to 40% of national highway revenue.
Such variations are reflected at the state level as well. According to a parliamentary question, the top four states accounted for over 40% of total toll revenue in 2022-23. They are Uttar Pradesh ( ₹5,583 crore, or a revenue share of 12%), Rajasthan ( ₹5,084 crore, 11%), Maharashtra ( ₹4,660 crore, 10%) and Gujarat ( ₹4,519 crore, 9%).
Future monetization
The average revenue per plaza (using 2022-23 revenues but the latest number of plazas) was ₹50 crore for Uttar Pradesh, ₹40 crore for Rajasthan, ₹62 crore for Maharashtra, and ₹86 crore for Gujarat. Under the NMP for roads, a total of ₹1.6 trillion is projected to be realized, with the bulk of it being monetized in 2023-24 and 2024-25—16,224 km of highway network, to the tune of ₹97,000 crore.
As per the NITI Aayog document, the key stretches to be monetized are spread across all four regions. It’s led by the west (2,031 km, 25 stretches), and followed by the south region (1,931 km, 28 stretches), east (1,478 km, 22 stretches) and north (1,361 km, 29 stretches). While it will add to the government’s coffers, it will lighten the user’s pockets.
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