Here’s a clear and concise overview of the proposed revision of India’s toll policy by the NITI Aayog / Ministry of Road Transport & Highways (MoRTH) that seeks to overhaul the system after roughly 30 years.
The current toll-user-fee structure on national highways in India is based on norms that trace back to around 1995 (for the key parameters) and were formalised in the National Highways Fee (Determination of Rates and Collection) Rules, 2008. Under this regime:
- Toll rates are computed roughly by taking the total cost of construction, maintenance, plus profit margin, divided by the estimated number of vehicles over the life of the road.
- The key inputs include vehicle operating cost (how much it costs to run the vehicle), a vehicle-damage factor (a technical estimate of how much damage a vehicle causes to the pavement), and the user’s “willingness to pay”.
- Toll rates are revised annually (typically from 1 April) based on an inflation index (the Wholesale Price Index, WPI). However, the core formula has remained largely unchanged for decades.
As of 2024-25, the toll collection on national highways was around ₹73,000 crore, and projected to reach about ₹80,000 crore for the year.
What is the Proposed Revision About?
The government has now decided that the toll policy needs a revamp, considering that many of the assumptions underlying the current formula are outdated. The key points of this revision include:
Review of Base Norms
The NITI Aayog has been tasked with reviewing the existing user-fee (toll) norms, including all the factors — vehicle operating cost, damage factor, user willingness to pay — to realign them with the present realities of traffic, road quality, and cost structures.
Reflect Changes in Traffic & Road Quality
Over the last 30 years, vehicle fleets, road technologies, traffic volumes, and maintenance/operating costs have all changed substantially. The policy revision aims to integrate such changes instead of continuing with legacy assumptions.
Modernise Tolling Mechanisms
While the news chiefly discusses the formula, implicit in the discourse is the push for more efficient tolling, possibly with digital mechanisms, better transparency, and user-friendly passes (for example, via the FASTag system).
Timeline & Process
The review by NITI Aayog, with support from academic institutions, is expected to deliver recommendations to the road ministry by the end of the current financial year.
Why is This Revision Needed?
Several key drivers make this revision timely and important:
- Outdated Parameters: The current norms were essentially built in the mid-1990s and simply adjusted each year for inflation. They do not adequately capture modern vehicle profiles, newer road construction/maintenance techniques, or changed traffic patterns.
- Cost Escalations and Complexity: Road construction today often involves tunnels, fly-overs, access-controlled expressways; maintenance and operations costs are higher. The previous model may under-recover or misprice such realities.
- User Equity & Willingness to Pay: As roads improve (better surfaces, higher speeds, more access control), the user’s “willingness to pay” may have changed. Moreover, fairer tolling implies aligning more with user benefit and less arbitrary cost distributions.
- Revenue Sustainability and Transparency: Given the large toll collections and major infrastructure financing, policy certainty is vital. A modern, clearly rationalised toll policy improves credibility for both users and investors.
- Technology and Digitalisation: With systems like FASTag becoming ubiquitous, tolling models need to evolve from simple static booths to integrated digital systems, dynamic pricing, passes, etc.
Potential Implications
Here are some of the implications if the revision moves ahead:
- For commuters / private users:
- Some may see higher tolls if their usage of premium roads or vehicle types imposes higher damage costs or they derive more benefit.
- Others may gain from more rational pricing, passes (annual/monthly) that could bring down the average cost for regular users.
- More transparency and easier digital payment (via FASTag and linked passes) may reduce delays and improve the travel experience.
- For Freight / Commercial Vehicles:
- Since the damage factor and usage are higher for heavy vehicles, changes could affect their toll cost significantly.
- These costs may translate into logistics/freight cost adjustments.
- For Road Developers/Financiers:
- A revised base formula could affect projected toll revenue, returns on investments, and risk profiles of road assets. For example, an analysis by CRISIL shows changes in WPI linking factors can reduce base toll rates by 3-5 % and equity returns by ~100 bps for some assets.
- Policy clarity will matter: any retrospective change or harsh revision could affect investor confidence.
- For State & Central Governments:
- Better alignment of tolls with infrastructure maintenance and user benefit could improve highway network sustainability.
- But policy must balance user affordability, economic implications (especially for freight), and infrastructure funding.
Challenges & Considerations
- Balancing Affordability vs Recovery: Toll rates must not be so high as to discourage usage or shift traffic back to undivided highways, but must ensure cost recovery and maintenance.
- Data and Modelling Quality: Estimating damage factors, operating costs, and traffic projections requires up-to-date, reliable data, which can be challenging given the diverse road stretches across India.
- Transition Mechanisms: Changing formula mid-stream may create winners and losers; transitional arrangements (e.g., phased implementation, grandfathering) will help acceptance.
- Stakeholder Consultation: Users, commercial transporters, concessionaires, state governments, and residents are all impacted — their inputs matter.
- Technology & Enforcement: As tolling modernises (digital, passes, GPS tracking, etc), the infrastructure must be robust to avoid misuse or inequity.
Conclusion
In summary, India’s move to revise its toll policy after three decades is a welcome step to bring the user-fee regime in line with contemporary realities—not just inflation-adjustments but structural changes in vehicles, roads, traffic, technology, and user behaviour. The review by NITI Aayog aims to reset fundamental parameters, making tolling fairer, more transparent, and sustainable.
The devil will lie in the implementation: how the new formula is crafted, how transitional issues are handled, and how technology and enforcement are scaled. If done right, it could improve highway financing, reduce bottlenecks, and enhance user experience. If done poorly, it could lead to push-back from transporters, users, or investors.