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Toll collection and remittances from existing roads will fall by 13 per cent, assuming there is only a 57-day lockdown (March 22 to May 17). However, the decline will be sharper 17 per cent if the lockdown is extended by another two weeks, according to a Crisil report.
The National Highways Authority of India (NHAI), the nodal agency for the roads sector, had stopped toll collections up to April 20, after the government imposed the nationwide lockdown in March.
Toll collection has since restarted, but a V-shaped revival in traffic after the lockdown ends – probably on May 17 – is unlikely. There will only be a gradual return to normalcy, it said.
With the nationwide lockdown to fight the Covid-19 pandemic restricting inter- and intra-state traffic of essential services, toll collection from build-operate-transfer (BOT) highway projects and remittances from publicly-funded projects would decline sharply in the near term.
While construction of new highways has also been affected, those constructed and commissioned over the past one year will help reduce the rate of decline in toll collection by more than half.
Over the long term (fiscals 2019-2024), Crisil Research expects toll collection to bounce back to a healthier annual growth rate of 11-12 per cent on the back of new road construction.
This, however, is lower than the 14.6 per cent clocked in the preceding five fiscals. New road executions will hold the key to both reducing the impact of the lockdown in the immediate term and boosting growth over the long term, it added.
Traffic de-growth to hit toll collections
Toll collection and remittances from highway projects are set to decline sharply this fiscal, with a longer lockdown leading to a steeper fall in toll collections.
New highway completion, expected to fall 20-25 per cent from the initial expectation this fiscal, would help stem a slide in numbers.
Although some relaxations have been provided for the manufacturing sector in the recent guidelines, these are unlikely to help the sector revive immediately because of multiple factors such as hampered supply chains, persisting labour issues and slack end-consumer demand.
Economy disrupted
The pandemic has disrupted the Indian economy and, consequently, Crisil has revised its GDP growth forecast for fiscal 2021 to 1.8 per cent, from 3.5 per cent earlier. This is based on two assumptions – the monsoon will be normal, and the effect of the pandemic will subside materially, if not wear out completely, in April-June.
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