Toll collections witness double-digit growth

A high growth in Automotive Sales would subsequently lead to growth in traffic volumes and Toll collections.

New Delhi: Toll collections are likely to witness a double-digit growth in the next financial year, propelled by an increase in commercial vehicle sales and wholesale price index (WPI), rating agency ICRA said Thursday. “Driven by strong growth in medium and heavy commercial vehicles (M&HCV), along with an increase in WPI, toll collections are likely to witness a significant growth in 2019-20,” ICRA said in a statement.

Toll collections may witness double-digit growth in FY’20 ICRA

A high growth in automotive sales would subsequently lead to growth in traffic volumes, it said.  Typically, commercial vehicles account for around 65-70 per cent of the total vehicular movement on a majority of national highways. Passenger vehicles account for the remaining 30-35 per cent.

The latest commercial vehicle (CV) sales trend is encouraging with the M&HCV cargo segment witnessing a robust growth of 38 per cent during first eight months of 2018-19, Rajeshwar Burla, Assistant VP & Associate Head, Corporate Ratings, ICRA said.

“Further, the average increase in WPI (toll rates are linked to WPI) for 2018-19 is expected to be around 4 per cent. The combination of high M&HCV sales and the increase in WPI would result in toll collections witnessing double-digit growth in 2019-20,” he said.

ICRA, in its latest study on performance of toll road projects, analysed 48 projects with a median operational track record of six years.

Based on the study, it observed that traffic volumes started decelerating in 2012-13 due to prolonged slowdown in economy.

“The implied median traffic growth (adjusting the revenues for toll rate hikes) witnessed a de-growth of 2.5 per cent in 2013-14. Most of these projects are important arterial routes and were affected in 2013-14 due to a slowdown in manufacturing and mining activity, following a ban on mining of several ores,” it said.

Source: https://goo.gl/gk6yS5