NEW DELHI: Pulling up the National Highways Authority of India (NHAI) and road transport ministry for collecting toll on highway stretches that are incomplete, under prolonged construction, or marked by serious deficiencies, the Public Accounts Committee (PAC) has recommended a government-backed framework for refunding or waiving user charges where highway services are below par.
In its latest report, the PAC has drawn attention to the Income Tax framework, where government has institutionalised a mechanism to process refunds to taxpayers in case of excess deduction or payment, and has recommended that NHAI and the road transport ministry establish a technology-driven and transparent mechanism for automatic toll refund or waiver in case a highway stretch is “incomplete, unfit, or unavailable fully or under maintenance for use”.
The apex parliamentary panel headed by Congress MP K C Venugopal recommended that the refund system should be “fully integrated with the electronic toll collection framework (FASTag) and designed to function without the need for user intervention, just as income tax refunds are processed and paid directly to taxpayers”.
The committee has referred to sections 7 and 10 of the NH Act, which detail the power of government to levy user fee in consideration of services or benefits rendered on NHs and require NHAI to discharge its functions in accordance with sound business principles, to arrive at its conclusions.
“The Committee finds it unacceptable that toll continues to be collected even in situations where the essential service — namely, safe, uninterrupted, and timely travel — is not available. This includes highway stretches that are incomplete, under prolonged construction, or marked by serious deficiencies in safety and traffic flow. Continuing to levy toll without delivering the promised level of service violates both the user-pay principle embedded in Section-7 of the NH Act and the norms of fair commercial conduct envisaged under Section-10 of the NHAI Act,” the report said.
It also mentioned that the ministry had informed it that toll is presently collected under the NH Fee Rules, 2008, and is explicitly levied for the provision of highway-related services to users. The ministry had also told the PAC that user convenience remains a challenge and that efforts are underway to implement barrierless free-flow tolling systems to enhance service delivery.
There have been several instances where courts have directed NHAI to either suspend tolling or reduce charges till highway stretches are back in shape.
Questions Perpetual Tolling
The panel has also raised questions on toll charges linked to base rates first fixed in 2008 and annually revised, with a 3% annual escalation, irrespective of road quality, traffic volume, or user affordability.
It observed that the concept of tolling in perpetuity was first introduced through an amendment to the Fee Rules in 2008, allowing continued collection of user fees even after the recovery of project costs. "This provision was further clarified and codified through the 2023 amendment to the Fee Rules, which explicitly permits tolling to continue beyond the end of the concession period, thereby formalising a regime of perpetual tolling," it said.
It said once the concession period of a BOT-toll project is over, the asset is handed over to NHAI, after which it is operated as a publicly funded toll plaza, with toll revenues credited directly to the Consolidated Fund of India.
"While toll rates are revised annually through a formula combining a fixed 3% increment with partial indexation to the Wholesale Price Index, the committee find that there is no institutional mechanism to independently evaluate whether toll charges are justified in relation to actual operation and maintenance costs or future service requirements," the panel said.
The committee recommended that toll collection on any highway stretch must be rationalised and substantially reduced once capital and routine maintenance costs have been recovered. "Any continuation of tolls beyond this point should be permitted only if clearly justified and approved by the proposed independent oversight authority," it said while urging the ministry to review all existing contracts and publicly funded toll plazas allowing tolling beyond cost recovery in light of these principles to safeguard user interest and uphold the principle of equity in public infrastructure usage.
It has recommended establishing a tariff authority, on the lines of the Airports Economic Regulatory Authority (AERA) in the civil aviation sector, to ensure transparency and fairness in toll fixation, collection, and regulation.
In its latest report, the PAC has drawn attention to the Income Tax framework, where government has institutionalised a mechanism to process refunds to taxpayers in case of excess deduction or payment, and has recommended that NHAI and the road transport ministry establish a technology-driven and transparent mechanism for automatic toll refund or waiver in case a highway stretch is “incomplete, unfit, or unavailable fully or under maintenance for use”.
The apex parliamentary panel headed by Congress MP K C Venugopal recommended that the refund system should be “fully integrated with the electronic toll collection framework (FASTag) and designed to function without the need for user intervention, just as income tax refunds are processed and paid directly to taxpayers”.
The committee has referred to sections 7 and 10 of the NH Act, which detail the power of government to levy user fee in consideration of services or benefits rendered on NHs and require NHAI to discharge its functions in accordance with sound business principles, to arrive at its conclusions.
“The Committee finds it unacceptable that toll continues to be collected even in situations where the essential service — namely, safe, uninterrupted, and timely travel — is not available. This includes highway stretches that are incomplete, under prolonged construction, or marked by serious deficiencies in safety and traffic flow. Continuing to levy toll without delivering the promised level of service violates both the user-pay principle embedded in Section-7 of the NH Act and the norms of fair commercial conduct envisaged under Section-10 of the NHAI Act,” the report said.
It also mentioned that the ministry had informed it that toll is presently collected under the NH Fee Rules, 2008, and is explicitly levied for the provision of highway-related services to users. The ministry had also told the PAC that user convenience remains a challenge and that efforts are underway to implement barrierless free-flow tolling systems to enhance service delivery.
There have been several instances where courts have directed NHAI to either suspend tolling or reduce charges till highway stretches are back in shape.
Questions Perpetual Tolling
The panel has also raised questions on toll charges linked to base rates first fixed in 2008 and annually revised, with a 3% annual escalation, irrespective of road quality, traffic volume, or user affordability.
It observed that the concept of tolling in perpetuity was first introduced through an amendment to the Fee Rules in 2008, allowing continued collection of user fees even after the recovery of project costs. "This provision was further clarified and codified through the 2023 amendment to the Fee Rules, which explicitly permits tolling to continue beyond the end of the concession period, thereby formalising a regime of perpetual tolling," it said.
It said once the concession period of a BOT-toll project is over, the asset is handed over to NHAI, after which it is operated as a publicly funded toll plaza, with toll revenues credited directly to the Consolidated Fund of India.
"While toll rates are revised annually through a formula combining a fixed 3% increment with partial indexation to the Wholesale Price Index, the committee find that there is no institutional mechanism to independently evaluate whether toll charges are justified in relation to actual operation and maintenance costs or future service requirements," the panel said.
The committee recommended that toll collection on any highway stretch must be rationalised and substantially reduced once capital and routine maintenance costs have been recovered. "Any continuation of tolls beyond this point should be permitted only if clearly justified and approved by the proposed independent oversight authority," it said while urging the ministry to review all existing contracts and publicly funded toll plazas allowing tolling beyond cost recovery in light of these principles to safeguard user interest and uphold the principle of equity in public infrastructure usage.
It has recommended establishing a tariff authority, on the lines of the Airports Economic Regulatory Authority (AERA) in the civil aviation sector, to ensure transparency and fairness in toll fixation, collection, and regulation.
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