CRF, Centre pay all road costs; Highway toll is redundant; Why NHAI shares toll with operators?

India is almost ready to implement a unified indirect tax, GST. The businesses are likely to benefit but it needs many more steps to create one market. The growth will spur as many other taxes and tolls need to be re-jigged.
The nation has also to think of ending many other levies, which not only add to inflation but also impedes progress. It needs to do away with income-tax, profession tax that many states levy, have a relook at highway toll and municipal tolls. These are not only inflationary, these reduce the individual’s capacity to purchase (spend) that impacts overall growth of the country. It is said more the levies, more the corrupt practices and other indirect costs on business and individuals.
While still many would argue for I-T, it is considered a detrimental system. It forces the I-T payer subject to double taxation, even after GST. The businesses and individuals find it oppressive as it empowers authorities to harass them, many say for reasons other than collecting the tax.
Why should we have exorbitant highway tolls when even non-highway users are levied heavy road cess on petrol and diesel? In 2015-16, the government’s Central Road Fund (CRF) collected Rs 69,809 crore in 2015-16 and Rs 54787.21 crore from 2012 to 2015.
The CAG noted burdening users of Rs 28361 crore while providing benefits to private parties by fixing a longer concession period. The audit covered 94 projects or 45 percent of the total 407 BOT projects as on March 31, 2012.
The CAG said the NHAI failed to fulfill the role assigned to it by the government and provided undue benefits to R-Infra, L&T and IRB.
The recent Supreme Court order stopping toll and ordering CAG audit exposed the viciousness of the tolls. The Noida Toll Bridge, DND, had recovered Rs 810.18 crore from toll income since the commencement of the expressway till 31 March 2014. Approximately Rs300 crore more was realized through user fee or toll between 1 April 2014 and 30 September 2016.
This is the virtual truth of all BOT roads which are allowed to collect toll for 30 years. The SC in case of DND said that could not be allowed.
The CAG found that R-Infra collected Rs 662 crore as toll on two projects of 6-laning of highways and allegedly invested Rs 303 crore of it in its own mutual funds even before commencement of work.
Besides, nowhere in the world a highway like the Agra-Delhi is repeatedly subjected to “widening/improvement”. It has thrown traffic out of gear, causing severe delays and making the traffic highly unsafe and ecology fragile. No cost analysis of such act has been made but it would be enormous.
The Central Road Fund created in 2000 collects Rs 2 per litre on petrol and diesel. Of this, Rs 1.5 is allocated. Almost 10 percent of CRF is not spent.
The fund is allocated for rural roads (PMGSY), highway development, construction of state roads, under or over bridges and safety works at railway crossings. The national highways (NHAI) in 2013-14 got the bulk of its expenses at Rs 9882 crore.
In 2016-17, the NHAI got Rs 14976 crore for investment in highways, as per budget statement. It did not invest any extra. So where did the toll money go?
The NHAI collected toll of Rs 3446.87 crore in 2013-14; Rs 4179.30 crore in 2014-15; Rs 4937.48 crore in 2015-16; and Rs 3992.93 crore in 2016-17. While as per central budget its investment from its kitty was nil, it shared revenue with BOT operators at Rs 1848 crore, 1790 crore, 1825 crore and 1135 crore in the respective years. On an average it shared 40 to 60 percent of its toll collections with private operators.
This is a major question that NHAI needs to clarify. It also needs to come out with a white paper what it has been doing with the money parked with it. By simple logic it appears that while road users are being extorted, NHAI is not making investments on its own.
The toll by simple calculation appears to be an extra income, which it is liberally sharing with the private operators causing enormous problems of delay, mismanagement, brawls at toll gates and other law and order issues.
It is also interesting to note that the cost for security and law and order is being borne by the state governments.
Apparently, the cost of all road projects is being borne either by the central government or by the CRF. The toll thus becomes redundant. According to one statement made by an NHAI, the toll collections are done through agents and almost 30 percent collections remain unaccounted.
Entire issue of toll thus has become suspect. Apparently, unless the NHAI comes out clean on toll collection and its expenses, it must be stopped. Sharing it with operators cannot be considered an expense. It appears to be largesse and profiteering.
The method as has come out of the CAG audit is a legacy of the past governments. The NDA has to go deeper into it and look for how this toll can be eliminated for faster movement and inviting people also for tourism. Presently, one finds that people use their private vehicles only for short distance travel and not much for tourism. The toll is thus hampering growth of other sectors.
The former CAG Vinod Rai pointed out how lackadaisical is the method of NHAI. He commented, “There have been instances where the estimated traffic projections (of vehicles plying on highways) go haywire”. He did not say it is deliberate but could it not be?
The truckers across the country pleaded for abolition of toll gates and even agreed to pay one-time annual toll amount to end hampering of the movement drastically. It fell into deaf ears. This needs to be probed.
The toll is redundant, the statistics indicate. The reluctance of NHAI in removing it remains a mystery.
The NDA government has to take a call on this usurious practice. As it is now being fully funded by CRF and central budget, the elimination of toll and private operators would come as a great boost to the economy, the government revenue as well as faster integration to one market. Sooner it is done the higher kudos it would earn for the pro-people government of prime minister Narendra Modi.