National highway toll framework faces first overhaul in 17 years

IIT Delhi study to guide NITI Aayog's framework revision

The Centre has asked central policy think tank NITI Aayog to conduct fresh research on the fundamental principles behind toll base rates, instead of merely reapplying indexations to previous metrics, a senior government official said. This move is part of an effort to revise the national highway (NH) toll framework after 17 years.

 

In August, the Ministry of Road Transport and Highways informed the Parliament’s Public Accounts Committee (PAC) that it was considering a framework revision. “The ministry has asked the Aayog to conduct fresh research on the principles forming the basis of base rates. The Aayog has already commissioned the study to Indian Institute of Technology Delhi, which has requested a three-month time frame. The terms of reference mandate the agency to first settle the core principles,” the official said.

 

The first toll roads were introduced in 1997, and the base rates for those tolls were determined by three factors: vehicle operating cost, vehicle damage factor, and willingness to pay.

 

“The 2008 revision did not involve fresh research on base rate principles; it merely applied indexing to the initial base rates and provided a method for revising them annually,” the official added.

 

In 1997, vehicle operating costs were assessed based on a World Bank report from the early 1990s, vehicle damage factors were determined according to Indian Roads Congress technical specifications, and willingness to pay was gauged through a survey.

 

The current Aayog exercise will re-examine all these principles, and a third party will commission a fresh survey on people’s willingness to pay tolls. It will also explore whether additional factors should be incorporated into the toll determination framework.

 

In August, the ministry told the committee that the study would also cover inflation indexing and concession structures. “The committee recommends that the ministry pursue the proposed study — initiated through the Aayog in collaboration with reputed academic institutions — and ensure that it is time-bound and result-oriented,” PAC told the ministry.

 

A sector expert said vehicle operating costs and damage factors are likely lower now. Once the study is released, the ministry will need to develop a suitable, well-consulted framework for existing concessionaires, as multiple toll regimes now operate with more plazas run by private operators than in 2008.

 

The government is expected to maintain a large asset monetisation pipeline for NHs through 2030. Attractive toll projections have made NHs among the most lucrative government assets for private operators, with the ministry raising ~1.15 trillion from monetisation between 2020-21 and 2024-25.