Synopsis:
- FASTag collections for FY25 are estimated at ₹72,500 crore despite challenges.
- Toll revenue is expected to grow in FY26 with slight fee increases and better traffic.
- ₹2.5 trillion of toll monetization potential remains untapped.
- New smaller project awards under Bharatmala are reviving progress.
- H2 FY25 construction activity is likely to improve after a slow first half.
FASTag collections on national highways are projected to reach ₹72,500 crore in the financial year 2025 (FY25), according to a report by SBI Capital Markets. While the growth in collections reflects challenges such as slower traffic in H1 FY25 and minimal toll fee hikes, the stage is set for a promising recovery in FY26.
Key Insights from the Report:
- Toll Revenue Growth Recovery in FY26: Revenue is expected to improve in FY26, driven by a slight increase in toll fees and favorable base effects due to muted growth in FY25.
- Bharatmala Phase-I Cost Overruns: Costs for the Bharatmala Phase-I program have exceeded initial estimates, causing a halt in new project awards since November 2023. To address this, the government has begun awarding smaller projects valued below ₹1,000 crore to boost progress.
- Pending Awards Under Bharatmala: About 12,000 kilometers of highway work under Bharatmala is still pending, with ₹2.4 trillion yet to be allocated. States like Punjab, Kerala, and Andhra Pradesh will benefit significantly once these projects begin.
- Slowdown in Construction: While construction was slow in H1 FY25 due to bad weather and elections, activity is expected to improve in H2 FY25, which usually sees better performance.
- Untapped Monetisation Potential: National highway tolls have a total monetization potential of ₹3.6 trillion, but only ₹1.1 trillion has been realized so far. This means there is still ₹2.5 trillion worth of untapped opportunities to generate funds for further development.
Read in detail about What is FASTag and How Does it Work?
Although FY25 faced challenges like slow traffic growth, minimal toll fee hikes, and project delays, the outlook for India’s highways is positive. FY26 is expected to bring better toll revenue growth, progress on pending Bharatmala projects, and increased construction activity. Additionally, there is significant potential to unlock ₹2.5 trillion in toll revenues, which can greatly boost highway infrastructure and connectivity across the country.
