MoRTH To Moderate Road Execution; Toll Growth Six To Eight Per Cent
Toll collections were healthy in FY2025-26 and expected to grow by seven to nine per cent, while FY2026-27 collections were seen rising by six to eight per cent as traffic benefits from economic expansion. ICRA noted inflation-linked toll adjustments could rise about three point three per cent for newer projects linked to December Wholesale Price Index (WPI) and about two point five to three point zero per cent for older projects linked to March WPI. The agency found annual FASTag passes had limited effect on toll revenue and that initial operational issues were being resolved.
Road awards in the eight months to FY2025-26 were 1,951 km, 24 per cent lower than 2,558 km in the same period a year earlier, with higher awarding expected in the fourth quarter. Road execution under MoRTH fell by three per cent year on year to 4,612 km in the eight months to FY2025-26 from 4,761 km, and the typical six to nine month lag from award to execution suggested subdued revenue for developers in the near term.
ICRA said bidding intensity remained high for the National Highways Authority of India (NHAI) and MoRTH engineering, procurement and construction (EPC) projects despite reinstatement of earnest money deposits and added performance security. About 71 per cent of NHAI and MoRTH EPC projects were awarded at more than 20 per cent discount, and hybrid annuity model project discounts widened to minus 16 per cent and minus 21 per cent in FY2024-25 and the 10 months of FY2025-26. The agency expected competition to stay stiff and for developers to bid aggressively to rebuild order books while awards remain range bound.