Toll road revenues to grow: ICRA
Accordingly, this growth will be achieved on a low base following an estimated de-growth of 5-7 percent in FY21.
New Delhi: India’s toll roads are likely to witness a 14-15 per cent growth in collections in FY22, ratings agency ICRA said in a report. Accordingly, this growth will be achieved on a low base following an estimated de-growth of 5-7 percent in FY21.
“Road traffic has witnessed a marked improvement in H2 FY2021 after subdued traffic witnessed in the initial months, post resumption of tolling from April 20, 2020. This has been driven by increased movement of both – passenger and commercial vehicles, resulting in growth of around 10 per cent on a YoY basis.”
“Overall, in 9M FY2021, the traffic shrinkage witnessed is 4.6 per cent as compared of 13 per cent de-growth in Gross Value Added (GVA) of construction, mining and manufacturing.” “Freight movement has a strong correlation with the GVA of construction, mining and manufacturing, consequently toll collections closely mirrors the trends in GVA.”
“The non-services GVA growth for FY2022 is estimated to be in the range of 9.5-10.5 per cent. Adjusted for the impact of lockdown in this growth; for FY2022, the traffic is expected to increase by 5-6 per cent with average toll rate revision of 3-4 per cent.”
In the past, the traffic witnessed a contraction in FY2014 owing to a slowdown in manufacturing and mining activity, following a ban on mining of several ores. “With removal of the ban on iron-ore mining and pick-up in manufacturing activity, the median traffic growth improved to 4.9 per cent in FY2015 and thereafter to 8.5 per cent in FY2016.”
“However, a slowdown in the economic activity post-de-monetization period adversely affected the traffic during FY2017, resulting in subdued growth of traffic in FY2017 at 3.7 per cent. It said the after-effects of demonetization along with the implementation of GST led to weak first half in FY2018, thereby limiting growth to 4.9 per cent.
Further, the slowdown in economy, coupled with impact of revision in axle-load norms has adversely hit vehicular traffic and growth remained subdued at 2 per cent in FY2019. “Most of the stretches have witnessed a traffic slowdown during FY2020 with contraction of 3.8 per cent due to continued impact of revised axle norms in H1 FY2020, a general slowdown in the economy and the constrained vehicular movement in the run-up to the nationwide lockdown due to Covid-19 pandemic in Q4 FY2020.”
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