Sunday, May 24, 2015

One for the road

It might be possible to redesign toll collection to reduce transaction costs.

Those found not paying the toll tax will be penalised, civic officials said. (Source: Express archive) Economic costs associated with inefficient toll collection are even more worrying. (Source: Express photo)
Published on:July 5, 2014 12:02 am

By: Rohit K. Singh

Imagine travelling on high-quality national highways without having to stop every 60 or 70 kilometres at the toll plaza, without waiting in long, often chaotic, queues. Some might ask, but then how will our ambitious highway expansion plan be funded? It sounds counter-intuitive, but it might just be possible to do away with the toll plaza menace in its current form.

India has the world’s second largest road network, with 4.8 million km of roads. National highways comprise only about 98,200 km, or 2 per cent, of this but carry 40 per cent of the total traffic. Every year, about 8,000 km of national highway gets widened, strengthened or newly constructed, mostly through government-funded and public-private partnership modes of delivery. While construction has its own challenges, toll collection is increasingly witnessing conflicts, vandalism, law and order problems. Incidents in Maharashtra, Haryana and western UP are cases in point. The horrifying CCTV grab of a toll collection agent being shot by an enraged motorist is still fresh in our memory.

User charges are collected to recover capital investment on highways and to fund their operation and maintenance. It supplements infrastructure financing and reduces the pressure on the government’s budgetary allocations. It facilitates the expansion of the national highway network, crucial to fuelling inclusive economic growth. Interactions with stakeholders reveal that road users are willing to pay toll if they are provided adequate service levels, namely, reasonable riding quality and safety.

However, road users invariably complain about delays and harassment at toll plazas. Economic costs associated with inefficient toll collection are even more worrying. A study by IIM Calcutta and the Transport Corporation of India in 2012 concluded that “even though transit time had improved due to the new national highways, repeated number of halts at toll booths have humongous costs… the cost of delay on account of the commercial traffic being held up at toll plazas is of the order of a whopping Rs 27,000 crore per annum”. Add to this the loss of individual economic productivity due to delays.

One solution to this mess is a quick rollout of the electronic toll collection (ETC) system across the 280-odd plazas currently operational across India. However, in addition to the costs and complexities stemming from a multiplicity of operators along various stretches and the prerequisite of a central clearing house for seamless integration across the terrain, there are major enforcement issues. For example, how does one handle a vehicle with no electronic tag blocking a fast tag (ETC) lane — penalise with a higher toll or an offence under the Motor Vehicles Act? In faraway places, such situations might lead to conflicts.

What we need is a paradigm shift in the way we collect user charges for highways. The total toll collected on national highways …continued »

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