Crisil flags slower toll collection growth amid rising geopolitical tensions

Toll collection growth on India’s privately operated road assets is expected to slow to 5-7 percent this fiscal. Crisil Ratings attributes this moderation to weakened commercial traffic caused by geopolitical tensions and inflationary pressures. The agency’s study highlights that the ongoing conflict in West Asia has affected economic activity, leading to softer commercial vehicle movement.

Key Highlights

• Crisil Ratings projects 5-7 percent toll collection growth for this fiscal year
• Commercial vehicles account for 75 percent of toll collections and face pressure from geopolitical tensions.
• Passenger vehicle traffic continues to grow due to increased ownership and better conditions.
• One-fourth of toll assets saw traffic declines from diversions and other factors in the past two years
• Toll collection growth may rise to 8-10 percent next fiscal with higher inflation-linked rate hikes

Toll Collection Trends and Projections

Crisil Ratings’ assessment covers 91 toll road assets, spanning about 10,000 kilometers. These assets represent nearly 60 percent of privately operated concessions in India. The study found that toll collection growth could slow by 150-200 basis points year-on-year. This is mainly due to reduced commercial traffic, which is closely tied to industrial activity, construction, and mining.

Commercial vehicles contribute nearly 75 percent of total toll collections. The report notes that sectors linked to freight movement are under pressure due to the geopolitical situation. This trend is reflected in sequential declines in FASTag toll collections during March and April. Passenger vehicle traffic, in contrast, has continued to grow. Factors such as increased vehicle ownership, improved road connectivity, and reduced travel times on expressways have supported this growth.

Factors Affecting Traffic and Revenue

According to Crisil Ratings, traffic growth is estimated at 2-4 percent in the near term. Modest wholesale price index (WPI) inflation last year will limit toll rate hikes this fiscal. As a result, overall toll collection is projected to grow by 5-7 percent. Manish Gupta, Deputy Chief Ratings Officer at Crisil Ratings, stated that the slowdown is expected to be temporary. He noted that higher inflation-linked toll rate hikes could support stronger growth in the next fiscal year.

The report also highlights that passenger traffic growth has outpaced commercial traffic in recent years. Passenger vehicle movement is less exposed to geopolitical disruptions. About one-fourth of the sampled toll assets reported declines in traffic over the past two fiscal years. These declines were mainly due to traffic diversion towards newly built highways and expressways. Other contributing factors included heavy monsoons, sand mining restrictions, and issues with feeder routes.

Outlook for the Next Fiscal Year

Crisil Ratings expects toll collection growth to improve to 8-10 percent in the next fiscal year. This improvement will be supported by higher toll rate revisions linked to elevated wholesale price inflation this year. The agency also noted that operating performance and leverage levels remain stable. This stability helps maintain healthy credit profiles for toll road operators.

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CarBike 360 Says

Crisil’s outlook underscores a cautious phase for India’s toll road sector, as external geopolitical pressures and economic uncertainties weigh on traffic growth. While the long-term infrastructure story remains intact, near-term moderation in toll collections is likely. Going forward, sustained economic recovery and stable global conditions will be crucial to reviving momentum in highway traffic and revenue generation.