Growth in toll revenues led by traffic volumes witnessed in the last two years could come to a halt in the financial year 2017-2018. With traffic volumes still limping back to normal after demonetisation, the traffic is estimated to grow in the range of 4-5% in terms of the average annual daily traffic in FY18.
A latest study by ratings firm Icra shows, coupled with the toll rate revision for FY18 which is estimated to be at 3.9% (new toll policy) or 5.3% (old), toll collection growth for the year is estimated to be around 9-11%.
“Unlike the last two years, wherein the growth was primarily driven by traffic volumes, the growth in FY18 would be toll rate driven,” said a statement from Icra.
The traffic growth suggests that the steady uptick seen up to Q2FY17 was dampened by note ban. “The implied traffic grew by 2.3% in fourth quarter of FY17 as against a traffic growth of about 10.2% during the fourth quarter of FY16. The deceleration is largely due to the decline in manufacturing and mining sector growth. Overall, the implied traffic growth declined to 6.4% in FY17 when compared to 10.1% in FY16,” the study finds.
The vehicular traffic and most importantly freight movement is strongly correlated to GDP growth rate. About 60-65% of the freight traffic is dependent on mining and manufacturing sectors. Therefore, any contraction in these two sectors has a direct material adverse impact on freight traffic and thereby affects the toll collections.