Toll Collection Growth Seen Moderating Amid West Asia Conflict

Toll collection growth on India’s privately operated road assets is expected to moderate this fiscal year amid the ongoing West Asia conflict, according to a study by Crisil Ratings.

The ratings agency said toll collection growth could slow by 150-200 basis points year-on-year due to softer commercial traffic movement linked to the economic impact of the conflict. However, it expects the slowdown to be temporary, with higher inflation-linked toll rate hikes likely to support growth in the following fiscal.

A study covering 91 toll road assets spanning around 10,000 km and representing nearly 60 per cent of privately operated concessions formed the basis of the assessment.

“Traffic growth, a function of economic expansion, is estimated at 2-4% in the near term. A modest WPI inflation of last year will limit toll rate hikes this fiscal and consequently, toll collection will grow 5-7%,” said Manish Gupta, Deputy Chief Ratings Officer, Crisil Ratings.

Commercial vehicles continue to account for nearly 75 per cent of toll collections, with freight movement closely linked to industrial activity, construction and mining. Crisil noted that these sectors could face pressure amid the ongoing geopolitical situation, reflected in sequential declines in FASTag toll collections during March and April.

Passenger vehicle traffic, meanwhile, has continued to grow on the back of rising vehicle ownership, improved road connectivity and reduced travel times through expressways. The report noted that passenger traffic growth has outpaced commercial traffic in recent years and is relatively less exposed to geopolitical disruptions.

Crisil also highlighted that around one-fourth of the sampled toll assets reported traffic declines over the past two fiscals, primarily due to diversion towards newly built highways and expressways. Other factors included heavy monsoons, sand mining restrictions and feeder route issues.

The agency expects toll collection growth to improve to 8-10 percent next fiscal, supported by higher toll rate revisions linked to elevated wholesale price inflation this year. It added that operating performance and leverage levels remain stable, helping maintain healthy credit profiles for toll road operators.