Why Indians pay toll to use roads built with their own money

SC decision to scrap toll on DND road could be a landmark decision, not just for Delhi but for millions of people across India

If you have hit highways across India, you would know that we live in ‘toll’ country. On some stretches, toll booths are more frequent sightings than towns and villages. It would seem a cruel irony that the very people who pay tax to fund these roads have to pay money for using them. There are the income tax, road tax, fuel surcharge and a host of other indirect taxes that motorists contribute to the exchequer for building roads for them.
 
It is in this context that the Supreme Court (SC) order on the Delhi-Noida-Delhi (DND) flyway could be a benchmark for the future of tolls in India. The DND flyway is a prime example of a private operator making astronomical profits at the expense of public interest. On October 26, the Allahabad High Court (HC) had scrapped the toll on the bridge interconnecting South and East Delhi with Noida. The court decision came in response to a petition filed by the Federation of Noida Residents Welfare Association. The road is a lifeline to millions of commuters – office-goers, college students and others using it every day.

 
The concession agreement between the UP government and Noida Toll Bridge Corporation Limited (NTBCL), the company that operates the DND flyway, is also a reflection of how public-private partnerships (PPP) for road projects are conceptualised in India.
 

The agreement, a copy of which has been reviewed by Business Standard, states that the toll should have been removed once the company collected its original project cost of Rs 408 crore with an annual return of 20%, or after 30 years, whichever came earlier.
 
According to documents filed by NTBCL before the London Stock Exchange (LSE), the company revised its toll collection period to 70 years soon after the road was operationalised in 2001. The company’s annual report shows that the amount of toll remaining to be recovered kept on increasing every year. In 2001, the amount was approximately Rs 500 crore. By 2014, the company estimated its recoveries to be Rs 3,500 crore. With this amount increasing every year, the residents of the national capital could have never expected to use the road without paying toll.

 
While any developer who has invested money in a road project has the right to make profits on it, in the case of DND, it might have amounted to making abnormal profits at the expense of public convenience. Even after two decades of operating the toll road, the company kept increasing estimates of the money it had to recover.
 
There are other highly controversial clauses in the concession agreement that would have given the company a virtually free run for decades to come. The audit of the toll collections is done by an independent auditor that is appointed by the company. In this scenario, it is impossible to ascertain the veracity of the collection figures being claimed by the company.

 
Reports from across the country hint at overcharging by many toll operators, collection of tolls without proper accounting, and levy of tolls for sub-standard roads by private operators. Figures from the National Highway Toll Information System (NHTIS) shows that there are 390 toll booths on national highways across India. The number of toll booths is the highest in Tamil Nadu, which is followed by Uttar Pradesh. It is unclear how many toll booths exist on state highways in India.
 
Gujarat had abolished tolls on its state highways for cars and buses from August 15 this year. Union Transport Minister Nitin Gadkari had announced last year that the government would scrap 125 toll booths across the country. However, little progress seems to have been made on that front.

 
Even if the highest court of the country decides to uphold the Allahabad High Court decision and scrap toll on the DND flyway, there would still be hundreds more across the country still in operation. For the taxpayer, that would mean that India would continue to be a country of tolls for years to come.