Thanks to low inflation, users of national highways could be looking at a under 5 per cent increase in toll charges in 2015, against an average 7-8 per cent rise in the past few years.
With wholesale price index (WPI)-based inflation growth at zero in November, and below 4 per cent levels since August, toll charges are expected to go up by less than 5 per cent this year, said both government and industry officials.
Annual toll revision for national highways comes into effect from April 1 and is linked to the WPI. Every year, toll rates for national highway stretches go up by 3 per cent, plus 40 per cent of WPI change recorded in December. India recorded a WPI inflation of zero per cent in November, 1.77 per cent in October, 2.38 per cent in September, 3.74 per cent in August.
“Given the current trend of low inflation, developers are expecting below 5 per cent growth in toll rates next fiscal,” M Murali, Secretary General, National Highway Builders Federation (NHBF), told Business Line.
“This is definitely good news for road users, subject to the toll rate rounding off to the nearest ₹5,” K Venkatesh, Chief Executive and Managing Director, L&T Infrastructure Development Projects Limited, said. The 2008 toll policy of National Highways Authority of India also calls for rounding off toll rates to the nearest Rs 5.
Traffic growth on highways varies depending on macro-economic conditions in general and local economic conditions in particular. So, this could be a cause for concern for developers, especially stretches that do not see much growth in traffic volume.
“We expect the growth in toll rates for national highways to be moderate (lower) next year than in the previous years. But, we also expect the traffic volumes to pick up based on higher economic activity. In fact, a few years ago, there was a slowdown in traffic growth, but inflation was high. As a result, we were seeing 4 per cent growth in traffic volumes, while toll tariffs were going up by about 8 per cent. Next year, this is likely to be reversed for our stretches: a 7-8 per cent growth in traffic, against a lower growth in toll tariffs. We are already seeing double digit growth in many of our stretches,” Virendra Mhaiskar, CMD, IRB Infrastructure Developers, said.
“It would be difficult to predict impact on developers. It would vary from project to project,” said Venkatesh, whose firm has several projects registering double digit traffic growth.
“Overall, the developers are watching out for a continuous growth in industrial activity. The traffic in roads is also going up due to the share of cargo moving by railway going down,” said Murali.