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Road development evoked developer interest in a big way when it was launched. But the dream of high returns turned out to be a nightmare due to a few reasons. One, the pace of awarding projects slowed — from a high of 17.8 km awarded on average per day in 2011-12, it dropped to three to four km per day during 2012-14. Two, the pace of execution was sluggish — daily road construction fell from an average of 7.4 km in 2012-13 to 4.1 km in 2014-15. Three, rising interest rates in the last few years have left debt-laden developers in distress. Add to this, traffic on completed toll roads dipped by over 1 per cent in 2013-14, straining revenue.
About 40 per cent of the operational toll road projects may not be able to meet their debt servicing obligations to the tune of ₹17,200 crore, according to CRISIL estimates.
As developers struggled to meet their debt service dues, banks reduced their exposure to the sector, lowering liquidity. Construction projects have been stuck for many months or years due to lack of clearances; these lead to a double whammy of cost overruns and loss of revenue.
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