Toll collections to see 13% drop due to nationwide lockdown; revival likely to be slow: CRISIL Research

New Delhi: The 57-day nationwide lockdown due to COVID-19 will result in a sharp 13 percent fall in toll collections and remittances, CRISIL Research said on Wednesday.

In case, the lockdown is extended by another two weeks, the decline will be even sharper at 17 percent, it said.

“Traffic on highways set to de-grow 16.5 percent this fiscal, which would cull toll collection by 13 percent in base case,” a CRISIL Research statement said.

With the nationwide lockdown to fight the COVID-19 pandemic restricting inter- and intra-state traffic to essential services, toll collections from build-operate-transfer (BOT) highway projects, and remittances from publicly funded projects would decline sharply in the near term, it said.

The National Highways Authority of India (NHAI), the nodal agency for the roads sector, had stopped toll collections up to 20 April 2020, after the government imposed the nationwide lockdown on 25 March.

Toll collection has restarted since, but there is unlikely to be a V-shaped revival in traffic after the lockdown ends, probably on 17 May, the statement said adding, there will only be a gradual return to normalcy.

“Consequently, toll collections and remittances from existing roads will fall a sharp 13 percent assuming there’s only a 57-day lockdown (from 22 March to 17 May). That decline will be an even sharper 17 percent if the lockdown is extended by another two weeks,” it said.

While construction of new highways is also affected, those constructed and commissioned over the past one year will help reduce the rate of decline in toll collections by more than half.

Over the long term - fiscals 2019-2024, CRISIL Research said it expects toll collections to bounce back to a healthier compound annual growth rate (CAGR) of 11-12 percent on the back of new road construction.

“This, however, is lower than the 14.6 percent 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 said.