Research & Analysis

Toll Tax Extortion: Mega scam singles economy

It is time, rather most opportune time, to do away with road toll and review the levy of infrastructure cess of Rs 9 per litre. With massive swindling of toll money, non-deposition of collected funds with IL&FS and NHAI, it has developed into the largest of the scams. A moot question is: why the toll is being continued despite exposure of mega bungling?

On an average NHAI collects Rs 60 to 65 crore as toll every day — Rs 23625 crore a year is the modest assessment. Besides, over Rs 2.5 lakh crore a year is collected from infra cess on petrol. The issue is serious as despite massive collections or extortions from the common man the economy is showing no sign of improvement. The International Monetary Fund and Asian Development Bank have estimated fall in growth.

The IL&FS funding for the road projects lost Rs 91,000 core as per official estimates as the concessionaires who were supposed to pay back through toll collections did not do so. It has affected a number of banks, non-banking organisations and others.

The issue of NHAI losses reportedly has singed one of the highest offices and has taken toll of a senior most bureaucrat, who protested. It is said that he not only wanted a probe but also a review for giving up the highway toll. The PMO is said to have asked the NHAI to discontinue construction of road and monetise assets.

Former NHAI Chairman Brijeshwar Singh has said that the authority is piling a huge debt of Rs 1.78 lakh crore up from Rs 40,000 crore in 2014. Another top official has said that NHAI is totally log jammed by an unplanned and excessive expansion of roads and it is mandated to pay much higher cost for land acquisition and construction.

According to the Ministry of Finance’s revenue collection estimates, the Centre collected over Rs 2.579-lakh crore by levying cess and taxes, on the petroleum products in FY19. This is a massive jump from the gross revenue collection of around Rs 88,600 crore in 2013/14. In FY18, the collection was Rs 2.016-lakh crore.

The latest NHAI bid offer is of Rs 1.75 lakh crore. A simple question is where is this massive collection from cess going to? Since the cess collection at Rs 9 now, during the five years is about Rs 10 lakh crore, where is the need for NHAI to set up a non-transparent, if not corrupt, toll system? Who do they want to feed?

There is yet another irrational annual raise of 5 to 10 per cent in toll rates. It is estimated that average toll rates have gone by 250 per cent in nine years. Logically, every year toll should get reduced as the cost is progressively recovered. This apart, misbehavior at toll plazas almost regularly leads to law and order situations. Recently, at a toll plaza in Ghaziabad on NH 91, a commuter was charged over Rs 11 lakh on his credit card. Luckily, he did not have the limit. Plus, such roads must be traversed by ministers to see how dilapidated is that highway like most others.

The Government’s audit departments have raised objection to many toll practices. The crowded toll gates cost Rs 87,000 crore a year, including additional fuel cost of Rs 60,000 crore, to the nation in time lost and additional fuel expenses, according to an IIM, Kolkata study in 2011-12. It is more than the toll collected a year.

The IIM conducted the survey on 17 routes, including, Delhi-Mumbai and Delhi-Bengaluru. On an average for a journey of 2000 km six hours are lost at toll gates. There has been little improvement since. The toll gates remain chaotic despite the so called RFID tag. At many gates these do not work and manual clearance cause long jams.

According to NHAI, commuters can pass a toll plaza free of cost, should they spend 2 minutes and 50 seconds in the queue. There is total waiting time of 3 minutes. But if one insists on it at a toll gate, it would be a miracle if he can save his life from the concessionaires’ goons.

The ministers often say the greatest untruth that roads could not be built unless people pay. The reality is people are paying everyday in the name of infrastructure cess of Rs 9 per litre or Rs 90 per ten litres on petrol. They pay exaggerated toll tax at every gate. Each toll payment is at least 60 per cent more than it should be. At each toll gate one wastes a minimum of 10 to 15 minutes leading to additional fuel cost and time.

For instance, before the toll was levied on Delhi-Jaipur highway, it would take approximately six hours to travel. Now it takes not less than seven hours. And if it is Ghaziabad-Aligarh, it takes not less than three hours. None of the roads have the normal quality.

Recently, the NHAI has been slapped a fine of Rs 750 crore in an arbitration case, which requires the authority to pay West Haryana Highways Projects, a private company that widened the National Highway between Delhi and Haryana border connecting Rohtak. The total cost of the project was Rs 586 crore. The developer also charged Rs 4 crore for supposed loss post demonetisation. It is strange when the entire nation suffered most developers got handsomely paid by the NHAI. The developer did not even pay the engineers employed by it and that cost was added to NHAI costs.

During demonetisation, the NHAI paid Rs 922 crore for supposed loss. It appears that it has not been managing its affairs properly and public money is being swindled away. According to NHAI, the concessionaires do not pay almost one-third of the collections. In other words, its losses are gains for concessionaires. Since most toll gates are managed by influential people and a sizeable contribution goes to various poll funds, nobody wants to do away with a cash cow. Governments apparently ignore the inflationary effect of the high, irrational toll taxes because it benefits those close to power.

Rationally as tolls are developing into large scams and about Rs 2.5 lakh crore are being collected a year through infra cess, the government should do away with all toll collections and remove the toll gates. It would be a great saving, pace up movement and lubricate the economy. Of late, the PMO has taken note of the NHAI irregularities. The country should hope that better sense will prevail and sane decisions will be taken.

…INFA

 

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