Comment

The launch of the Tata small car (‘the Rs1 lakh car’) will force governments — especially the municipalities — to review their road pricing strategies.

Currently what we have is a non-strategy, for no local government in India actually charges motorists anything but a flat fee for using its roads.

Thus, there are one-time vehicle registration fees, some parking charges, and highway tolls. Even the tolls are sometimes nothing more than city entry taxes. They do not add up to a viable road pricing strategy.

India produces 10 million vehicles of all kinds annually. With this kind of output, roads have to be at a premium. If the Tatas put another one million vehicles on the road annually, the issue cannot be avoided any longer.

Quite clearly, existing road space in cities and towns needs to be more efficiently utilised, and we need to raise more money for investing in better and more roads.

Efficient utilisation means two things: forcing low-value users to pay more and encouraging high-value users, if necessary, by subsidising them.

Efficiency in road usage means carrying more members of the public for every square inch of public road available. In other words, vehicles carrying more people (buses, taxis) are more efficient in utilising roadspace compared to cars and two-wheelers.

In India, we treat two-wheelers as the poor man’s private transport, when in reality they should be reckoned as half a car. Due to higher speed, a two-wheeler needs more road space than we think it does.

The real amount of space occupied by a vehicle in motion is not its physical dimension, but this dimension plus the minimum distance required between it and other vehicles.

And this is a function of speed; this is what makes two-wheelers occupy more space than their actual physical dimensions. They need to be taxed accordingly.

Broadly speaking, there are three ways to begin the process. One should start by replacing the current system of one-time registration fees with an annual system.

The best alternative would be an upward sloping fee structure where the rates are lowest for new cars and two-wheelers, rising progressively as vehicles age.

This would have the advantage of encouraging people to upgrade to more fuel-efficient and modern vehicles even while penalising older, more polluting ones.

Once such a system is in place, we need to look at creating congestion charges for areas with dense traffic in cities. The London system could be one such alternative, with car and two-wheeler owners getting a bill every month.

The best system, though, would be one where we can charge vehicles for the total amount of road usage. It is possible today to install radio frequency IDs in cars which can be picked up by various sensors located in different areas of a city.

Once again, vehicle owners would get monthly bills depending on what the sensors have picked up. Monthly bills would roughly correspond to the amount of road used during the period.

It goes without saying that any system needs to be tried out in a pilot project before being expanded to entire cities. One thing is certain.

The toll charged for cars entering or exiting Mumbai is not only discriminatory, but actually does little to price roads better.

Mumbai’s citizens, who use most of the city’s roads and cause all its pollution, end up paying nothing; vehicle users entering the city from the suburbs or other towns pick up the entire bill.

This leads to a moral hazard where Peter is robbed to pay Paul (the Mumbaikar). Paul has no reason to use public transport or stop using polluting vehicles because he does not pay for it.

The key to sensible road pricing is the principle that those who use the roads more must pay more, with public transport vehicles paying little or nothing.

We need to have the systems and technology in place before we can implement road pricing. The Tata car should prompt urban planners to start thinking along those lines.

Email: r_jagannathan@dnaindia.net