Home / News / India /  Toll collections to pick up from June: Icra

NEW DELHI: India’s toll road projects may register revenue growth, albeit low, in the current financial year, despite interstate and intrastate restrictions put in place to contain the second wave of coronavirus pandemic that originated in Wuhan, China.

According to Icra, “despite the lack of a nationwide stringent lockdown or toll suspensions, the regional restrictions imposed in several states, along with the increase in wariness, has negatively affected the people movement in the past few weeks."

This comes in the backdrop of several states imposing lockdowns. After the first wave, India’s highways started getting busy again, reflecting a rebound in economic activity before the second wave hit the country. India has a 137,635 km of national highway network.

“With fall in number of Covid cases from third week of May 2021, the States are expected to relax the lockdown restrictions in a gradual manner. We expect the toll collections to ramp-up from June onwards. Despite hitting a speed breaker in the form of second wave of Covid; toll road projects are expected to witness low teen revenue growth in FY2022 on the back of low base and inflation linked increase in toll rates," said Rajeshwar Burla, co-group head and vice president, corporate ratings at Icra in the statement.

This comes at a time when India plans to construct 40 km of highways every day this fiscal, beating its previous daily record of 37 km that was constructed during 2019-20. The ministry of road transport and highways (MoRTH) exceeded the target for highway construction for financial year 2021 despite the pandemic and had built 13,505 km of national highways till 31 March 2021.

According to experts, there was a quick recovery in toll collections during the pandemic.

“If you look at the kind of recovery that roads had in terms of vehicles coming back and toll getting collected, it was almost miraculous," said Kavita Saha, Senior Principal- Infrastructure, CPP Investments at Mint India Investment summit last month.

“Road traffic had witnessed a marked improvement in H2 FY2021 after subdued traffic witnessed in the initial months of the last fiscal, post resumption of tolling from April 20, 2020," the ICRA report added.

India has lined up a large infrastructure capital expenditure plan, with the Union budget for fiscal 2022 increasing the outlay for road transport and highways ministry to 1.18 trillion.

“The toll collections reduced by around 10% in April 2021 over Mar 2021 and estimated to decline by 25-30% in May 2021 over April 2021," the Icra report said, adding that, “Severe impact on the toll collections from passenger vehicles and bus categories due to strict restrictions imposed on people movement by various states."

While there was an improvement in passenger and commercial vehicles traffic after the first wave of the pandemic, vehicular road traffic has since dipped due to the second wave that is raging across the country.

“The sudden and severe onset of the second wave of the Covid pandemic, has adversely impacted the toll collections again, and the same are on the downward trajectory," the report said.

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