A congestion tax is a fee that is levied on vehicles entering densely populated and high-traffic areas during peak hours. On February 8, newly elected municipal councillor Makarand Narwekar sent a letter to Mumbai’s civic chief, Bhushan Gagrani, asking him to consider implementing a congestion tax in Mumbai.
The purpose of congestion tax is to limit vehicular load in already heavily clogged areas and regulate emission levels, which contribute to poor air quality.
In his letter to the civic chief, Narwekar proposed a tax bracket of Rs 50–100 per entry during peak hours (8–11 am and 5–8 pm). He also suggested that high-traffic zones can be demarcated using existing CCTV networks and Automatic Number Plate Recognition (ANPR) cameras at entry points.
This methodology is commonly practised in Europe in cities like Stockholm and London. In Asia, Singapore has this provision. However, in India, such a fee is yet to be implemented.
A global practice
A congestion tax was first mooted in Singapore in 1975 on streets leading to the Central Business District (CBD). Singapore’s economy expanded rapidly from the mid-1970s, leading to a surge in car ownership.
According to the paper, ‘Making a case for congestion pricing in Indian cities’, authored by retired IAS officer and urban mobility expert Dr Ramnath Jha for the Observer Research Foundation (ORF), “The CBD that saw a five-fold rise in employment was especially tormented by congestion. To tackle this situation, Singapore introduced the Area Licensing Scheme (ALS) in 1975. This was a tool primarily to control traffic volume. To begin with, ALS was a manual system of tolls. Motor vehicles entering a restricted zone were required to pay a flat fee from Monday to Saturday during peak hours (7.30 am to 10.30 am). In 1989, ALS added evening peak hours (4.30 pm to 7 pm) from Monday to Friday.”
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In 2003, London implemented congestion charging fees in a 22-square-kilometre radius of the city. According to the ORF paper, the charge was set at 8 pounds, applicable from Monday to Friday between 7 am and 6 pm.
In Stockholm, a similar charge was implemented in 2006 after the Swedish Parliament approved a pilot project, despite two-thirds of the city’s population initially objecting to the system.
Was the congestion tax beneficial?
One of the successful results of implementing a congestion tax was seen in Stockholm. The pilot project extended for seven months and comprised three separate initiatives. The first was to augment the existing public transit system, under which 197 new buses were acquired and 16 new bus lines were introduced. The second involved the construction of parking lots outside the city limits so that people in remote locations could leave their cars and use public transit. The third was the imposition of a congestion charge in the city centre.
“During the pilot process, congestion dropped dramatically by 30–50 per cent and in the subsequent referendum, two-thirds of citizens voted in favour of the tax being made permanent. The congestion tax was then introduced permanently and in 2013, another Swedish city, Gothenburg, adopted it,” the paper stated.
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In London, the congestion charging zone experienced a 26 per cent reduction in congestion by 2006. Other benefits included reduced pollution, increased bus ridership, and raised revenue totalling £122 million in the 2005–2006 fiscal. The revenue generated from congestion charges first goes towards covering the operational costs of the scheme, and the rest contributes to the upkeep of the city’s public transport system.
Congestion tax in India
Prior to the BJP’s proposal in Mumbai, a congestion tax was proposed for Bengaluru by the Congress-led Karnataka government in September 2025. According to the proposal, single-occupancy vehicles entering Bengaluru’s Outer Ring Road (ORR) would be charged this fee. The proposal said the amount would be collected via FASTag, and the plan aimed to promote carpooling and public transport. However, following public backlash and political criticism regarding poor infrastructure, Karnataka’s Deputy Chief Minister D K Shivakumar ruled out the proposal.
Delhi had also proposed implementation of such a tax, but it was not implemented.
One of the key reasons why such a tax has not been implemented in India is the lack of alternative infrastructure support. In Mumbai, the current fleet of BEST buses has been shrinking, with its fleet size touching an all-time low. Even the Metro network is not fully completed yet. Also, the current Motor Vehicles Act (MVA) does not have a provision for such a charge.
