ICRA: Toll Revenue Is Decoupling From Traffic

ICRA Limited has projected national highway toll collections will grow 10–12 per cent in 2027-28, but the forecast carries a sharper structural signal for toll-road concessionaires and lenders: revenue is increasingly following WPI-linked tariff revisions rather than pure traffic expansion.

Year-wise traffic and collections

Co-group head of corporate ratings Suprio Banerjee framed the linkage explicitly.

- 2025-26: Construction, mining and manufacturing (CMM) GVA rose 8.1 per cent, supporting 6 per cent traffic growth and a 10 per cent rise in toll collections.
- 2026-27: ICRA expects collections to moderate to 7–9 per cent as traffic slows to 4–5 per cent and toll-rate growth compresses to 3.4–4 per cent, partly on export-related traffic weakness.
- 2027-28: ICRA expects higher toll revisions, underpinned by WPI growth of 8–8.5 per cent in December 2026 and 4.5–5.5 per cent in March 2027, driven partly by geopolitical tension in West Asia.

In effect, inflation-linked tariff escalation becomes the revenue engine, not incremental vehicle count.

Implications for MoRTH and contractors

That has direct consequences for the Ministry of Road Transport and Highways (MoRTH) award strategy. ICRA sees execution staying range-bound at 9,000–9,500 km in 2026-27, against 9,380 km in 2025-26, while awards climb to 8,000–8,500 km from roughly 7,000 km.

EPC remains the default route, but the government is deliberately reviving build-operate-transfer (BOT) toll projects. ICRA argues the revised BOT concession framework reduces downside risk to concessionaires and lenders.

For contractors and developers, the mix is shifting. EPC offers balance-sheet-light but margin-capped backlog, while BOT toll offers asset ownership, inflation-indexed revenue and refinancing upside — but reintroduces demand and operations risk.

The revised framework’s attempt to cap that downside is the real test of whether private capital returns at scale — and whether toll revenue decoupled from traffic can hold investor confidence through a slowdown.